In the

United States Court of Appeals

For the Seventh Circuit

No. 08-2724

UNITED ELECTRICAL, RADIO AND

MACHINE WORKERS OF AMERICA (UE),

Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent,

and

ALUMINUM CASTING & ENGINEERING

COMPANY, INCORPORATED,

Intervening Respondent.

Petition for Review of an Order of the

National Labor Relations Board.

Nos. 30-CA-12855, 30-CA-12902, 30-CA-12943, 

30-CA-12944 and 30-CA-12949

ARGUED JANUARY 15, 2009—DECIDED SEPTEMBER 2, 2009

Before RIPPLE, MANION and EVANS, Circuit Judges.

RIPPLE, Circuit Judge. This case has been here once

before. In our earlier decision, we enforced an order of the
2 No. 08-2724

See Aluminum Casting & Eng’g Co., Inc. & United Elec., Radio & 1

Mach. Workers of Am., 349 NLRB No. 18, slip op. at 2 (Jan. 31,

2007) (Second Supplemental Decision and Order).

National Labor Relations Board (“the Board”), which

had found that Aluminum Casting & Engineering Company, Inc. (“ACE/CO” or “the Company”) violated the

National Labor Relations Act (“NLRA”) when, in 1995, it

deviated from its established practice of awarding

annual, across-the-board wage increases to all employees

because of their attempts to unionize. See NLRB v. Aluminum Casting & Eng’g Co., Inc., 230 F.3d 286, 293 (7th Cir.

2000) (UEW I). In UEW I, we enforced the Board’s

order requiring ACE/CO to “[m]ake whole all employees

who were not granted annual wage increases in 1995 to

date.” Id. at 295 (emphasis omitted). We noted, however,

that ACE/CO should be given the opportunity to prove

that it would not have awarded an across-the-board

wage increase in 1996 and the following years. Id. at 296-97.

After a substantial-compliance investigation, the Administrative Law Judge (“ALJ”) determined that a twentyfive-cent-per-hour wage increase had been withheld

unlawfully from the employees in 1995. The ALJ further

determined that ACE/CO’s liability for this across-theboard wage increase was limited to 1995, and, consequently, ACE/CO was not required to build this additional twenty-five cents per hour into its employees’

wages for 1996 and the following years. A majority of a

three-member panel of the Board agreed. It reasoned 1

that carrying forward the 1995 wage increase into 1996
No. 08-2724 3

See Aluminum Casting & Eng’g Co., Inc. & United Elec., Radio & 2

Mach. Workers of Am., 325 NLRB No. 1, slip op. at 1-2 (Jan. 18,

2008) (Third Supplemental Decision and Order).

and the following years would result in a windfall for

the employees and would be inconsistent with the remedial purposes of the National Labor Relations Act, 49

Stat. 449, as amended, 29 U.S.C. § 151 et seq. Second

Supplemental Decision and Order, 349 NLRB No. 18, slip

op. at 2. ACE/CO therefore was ordered only to award

back pay to 381 employees for the hours they worked in

1995. The Board did not, however, require ACE/CO to 2

build this wage increase into each employee’s base wage.

 In this petition for review, United Electrical, Radio &

Machine Workers of America (“UEW”) maintains that

the Board’s 1995 back pay award should have been incorporated into the employees’ “base wage” for that year,

so that all subsequent pay raises would be added to a

base wage that included this 1995 pay increase. In short,

they submit that, beginning in 1996, the employees’ “base

wage” should have been equal to the wage rate they

actually received in 1995 plus an additional twenty-five

cents per hour; any additional wage increases they received in 1996 and beyond should have been added to

that adjusted “base wage.” For the reasons set forth in

this opinion, we believe that the UEW is correct. Accordingly, we grant the petition for review, set aside the

decision of the Board and remand this case for

further proceedings consistent with this opinion.
4 No. 08-2724

I

BACKGROUND

A detailed discussion of the factual background of this

case may be found in our prior opinion, UEW I, 230 F.3d

at 288-93. For the convenience of the reader, we shall

repeat here the key details of ACE/CO’s compensation

practices that are necessary for an understanding of

this phase of the litigation.

In 1989, ACE/CO announced that its hourly employees

would receive a ten-cent-per-hour wage increase,

effective February 13, 1989, and would later receive an

additional five-cent-per-hour wage increase, effective

August 14, 1989. These wage increases, which were

based on rises in the cost of living in the Milwaukee

area, the Company’s performance and the wages offered

by comparable companies, became a permanent addition to the employees’ wages. Consequently, these wage

increases were added to the employees’ existing wage

rates and resulted in a new “base wage.” Raises in subsequent years were added to this base wage.

In 1990, across-the-board wage increases again were

implemented. These increases, like the 1989 increases,

became a permanent addition to the employees’ wages.

Although no wage increase was given in 1991, the

pattern of awarding across-the-board wage increases

continued in 1992, 1993 and 1994; each of these across-theboard wage increases became a permanent part of the

employees’ wages, resulting in a new base wage.

No wage increase was awarded in 1995. ACE/CO claimed

that, in that year, it had abandoned across-the-board
No. 08-2724 5

wage increases in favor of a new, merit- and trainingbased compensation system. The Board found, however,

that, at least in 1995, ACE/CO’s merit- and training-based

wage increases were ancillary to, and not substitutes

for, the across-the-board wage increases. The Board also

determined that ACE/CO’s failure to award across-theboard wage increases in 1995 was in retaliation for the

employees’ organizational activities and that ACE/CO

therefore had violated sections 8(a)(1) and 8(a)(3) of the

NLRA. Id. at 292-93. We sustained these determinations. See id. at 291-93.

After a subsequent substantial-compliance proceeding,

the Board determined that, in 1996, ACE/CO had abandoned the use of across-the-board wage increases and

had adopted a program that awarded wage increases

based on merit and the completion of training programs.

Therefore, reasoned the Board, the Company was not

obligated to award additional across-the-board wage

increases in 1996 or in subsequent years. Moreover,

ruled the majority of the Board panel, the new meritand training-based wage increases that were added in

1996 and the following years should be added to the

employees’ actual 1995 wage rates, which were not adjusted to include the twenty-five-cent-per-hour wage

increase wrongfully denied to the workers in that year.

The dissenting member of the Board took the view

that, although the Company was permitted to change

prospectively the manner in which it awarded wage

increases after 1995, it must build those later increases

on the adjusted base wage of the worker as of the end of

1995, a methodology that would incorporate the wrongfully denied wage increase into the employees’ wages.
6 No. 08-2724

II 

DISCUSSION

In reviewing the Board’s order, we must respect its

“broad discretion to devise [a] remed[y] that effectuate[s]

the policies of the [NLRA].” NLRB v. Intersweet, Inc., 125

F.3d 1064, 1067 (7th Cir. 1997) (citation and quotation

marks omitted); see 29 U.S.C. § 160(c) (permitting the

Board, upon finding that a party has engaged in an

unfair labor practice, “to take such affirmative action

including reinstatement of employees with or without

back pay, as will effectuate the policies of [the NLRA]”).

The Board’s exercise of this discretion “is subject to

only limited judicial review.” NLRB v. Midw. Pers. Servs.,

Inc., 508 F.3d 418, 422-23 (7th Cir. 2007). Therefore, we

shall “enforce the Board’s order if its factual findings

are supported by substantial evidence in the record as a

whole and its legal conclusions have a reasonable basis

in law.” NLRB v. Midw. Pers. Servs., Inc., 322 F.3d 969, 976

(7th Cir. 2003) (citing 29 U.S.C. § 160(e) and Universal

Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951)). 

A.

Given this standard of review, we must begin our

analysis with a careful, respectful study of the Board’s

opinion and the position that it takes in the brief that it

has filed before us. In the Board’s view, the Company

must award compensatory back pay for its violation of

the Act only for the hours actually worked by its employees in 1995. The evidence shows, the Board continues,
No. 08-2724 7

that the Company switched from a policy of across-theboard increases to a policy of merit- and training-based

increases in 1996. Therefore, it reasons, the 1995 wage

increase need not be included in the base wage to

which the 1996 merit increases are added. It relies

heavily on our statement in UEW I that ACE/CO should

be permitted to demonstrate that “it had abjured acrossthe-board raises . . . [which would] suffice to excuse

ACE/CO from making any adjustments for 1996, [and] it

would also establish this new baseline for future years

as well.” UEW I, 230 F.3d at 296.

In reaching this conclusion, the Board undertook a

detailed factual analysis and determined that ACE/CO

lawfully had created a new compensation system in

1996. It assumed that, in 1996, the Company allocated all

of the funds available for wage increases to merit- and

training-based wage increases under the new compensation system. In the Board’s view, the decision to

award only merit-based increases constituted a new

compensation system that “was not based on a ‘baseline’ for bargaining unit labor costs that incorporated a 25-

cent increase in 1995.” Second Supplemental Decision

and Order, 349 NLRB No. 18, slip op. at 2. In essence,

the Board assumed that the 1996 compensation system

would have been altered if the Company had made

across-the-board increases in 1995. To support this

view, the Board reasoned that, if ACE/CO had issued an

across-the-board wage increase in 1995, it necessarily

would have had less money available for merit- and

training-based wage increases in 1996, and the amounts

of those new wage increases necessarily would have
8 No. 08-2724

been decreased as a result. See Respondent’s Br. 22. After

the 1996 merit increases, therefore, each employee had

been restored, as closely as possible, to the economic

position in which he would have been absent ACE/CO’s

misconduct.

UEW, agreeing with the dissenting Board member,

submits that the Board misconstrued our language in

UEW I and also failed to resolve any ambiguities against

the wrongdoer, ACE/CO. According to UEW, our statement in the underlying case—“if . . . ACE/CO introduced evidence that it had abjured across-the-board

raises forever . . . not only would that suffice to excuse

ACE/CO from making any adjustments for 1996, but it

would establish this new baseline for future years as

well”—was intended to relieve ACE/CO from making

additional across-the-board wage increases in 1996 and

the following years, if the Board determined that the

Company had, in fact, abandoned that compensation

structure. It did not, however, excuse ACE/CO from the

obligation of permanently incorporating the 1995 acrossthe-board wage increase into its employees’ base wages

and adding any increases in 1996 and the following

years, however determined, to that base. To support

this view, UEW notes that, based on ACE/CO’s past

practice, it is clear that any across-the-board increase

awarded in 1995 would have been permanently incorporated into the employees’ wages in subsequent years.

Furthermore, UEW submits, to the extent that there is

any ambiguity as to whether the back pay award should

be permanently incorporated into the employees’ wages,

that ambiguity is attributable solely to ACE/CO’s
No. 08-2724 9

UEW disputes ACE/CO’s claim that a new compensation 3

system was implemented in 1996. It claims that ACE/CO

did not implement a new system, but, rather, expanded its

existing training- and merit-based compensation programs

and eliminated one component of its compensation system, the

across-the-board wage increase.

unlawful conduct and not the implementation of a new

compensation program. Thus, it concludes, the Board 3

should have resolved any ambiguities in favor of

the employees and permanently incorporated the

twenty-five-cent increase into the employees’ wage

rates. See Campbell Elec. Co., 340 NLRB 825, 826 (NLRB

2003) (noting that remedies should restore employees

to the position they would have obtained absent the

unfair labor practice, and indicating that “any . . . ambiguity regarding the status that would have [been]

obtained without the unlawful conduct must be resolved

against the . . . wrongdoer”).

B.

Central to the Board’s determination was its reading

of a passage of our opinion. The Board focused on our

statement that, if ACE/CO could show that it had abandoned across-the-board increases, it would be excused

from “making any adjustments for 1996, [and] it would

also establish this new baseline for future years as well.”

UEW I, 230 F.3d at 296. The Board read this statement to

mean that, if ACE/CO could demonstrate that it had

abandoned the use of across-the-board increases in 1996,
10 No. 08-2724

it could add any wage increases in 1996 and the following years to a 1995 baseline that reflected what actually

was paid to the employees, exclusive of the wrongfully

withheld twenty-five-cent-per-hour wage increase.

Second Supplemental Decision and Order, 349 NLRB No. 18,

slip op. at 3.

We cannot accept the Board’s reading of our earlier

opinion. In UEW I, we addressed the Company’s claim

that the Board’s original order was so broad that the

Company would be obliged to award across-theboard annual wage increases in 1995 and in each of the

following years. In reply to that argument, we simply

held that, once the workers were made whole for the violation of

the Act in 1995, the Board’s original order should not

be construed as requiring the Company to continue to

grant additional across-the-board increases in subsequent years if, in any of those years, it had decided to

institute another, lawful wage-increase system. In short,

it was our understanding that the Board’s order

required the Company to make the employees whole

for the violation that had occurred. Once the company

had done so, it was free to implement any wageincrease system that it chose, so long as that new wage

system complied with the Act. Our point was that the

Board did not have before it the question of any wage

increases for the years following 1995. The Board’s order

“expressly did not bind ACE/CO to a perpetual practice

of granting [across-the-board wage increases].” Id. at 296.

Therefore, we determined, if ACE/CO could demonstrate

“that general wage increases are passé and it has found a

better way to maintain competitive wage levels . . . [the]
No. 08-2724 11

order does no more than require payment of the 1995

increase.” Id.

This interpretation of our prior opinion is logical, given

the limited issue under discussion in UEW I: whether

the Board’s order impermissibly required ACE/CO to

award across-the-board increases for 1996 and each of

the following years. Id. at 295-96. Just as importantly, it

is the only interpretation that is compatible with the

law governing remedial measures under the Act. The

Board must make workers “whole for losses suffered on

account of an unfair labor practice” under the Act. Phelps

Dodge Corp. v. NLRB, 313 U.S. 177, 197 (1941). More specifically, in awarding back pay, the Board must attempt to

“recreate the . . . relationships that would have been had

there been no unfair labor practice.” Franks v. Bowman

Transp. Co., Inc., 424 U.S. 747, 769 (1976) (citation and

quotation marks omitted).

The Board contends that, in instituting the 1996 merit

increase policy, ACE/CO in effect addressed, albeit indirectly, its remedial obligations because it “lawfully allocated the money actually available to it for wage

increases solely to merit and training raises, without

consideration of an across-the-board increase.” Respondent’s Br. 22. The Board assumes that ACE/CO had only

a limited pool of funds available for wage increases in

1996, and that, had ACE/CO implemented an across-theboard increase in 1995, the size of that pool—and the

size of the 1996 wage increases—would have decreased

by an amount equal to the amount of funds allocated in

the 1995 across-the-board increase. Therefore, the Board
12 No. 08-2724

concludes, ACE/CO’s employees received the same

wage rate in 1996 as they would have received if

ACE/CO had awarded both the 1995 across-the-board

wage increase and the reduced 1996 wage increases.

Accordingly, the Board maintains that its remedy is

appropriately tailored to fulfilling its remedial obligation for the 1995 violation.

We cannot accept this argument. At the outset, the

record simply does not support the Board’s conclusion

that, had the Company not violated the Act in 1995

and instead paid the expected across-the-board wage

increase in that year, the pool of funds available for

the 1996 merit- and training-based program necessarily

would have been reduced by the amount paid out as

a result of the 1995 across-the-board increase. The record

is indeed vague on the total amount of funds available

for distribution in 1996, the total amount of raises

actually awarded in 1996, and ACE/CO’s methodology

for awarding the wage increases offered in that year. In

fact, when a compliance officer requested that ACE/CO

provide documentation relating to its decision to

abandon the across-the-board compensation system in

favor of an alternative reward system, ACE/CO was

unable to provide any minutes or documents reflecting

the reasoning behind its decision. See G.C. Ex.12 at 1, 2

(statement of Compliance Officer Gifford).

More importantly, even if the pool of funds available

for the 1996 merit-based increases had included the

amount of money that otherwise would have been distributed had the Company awarded an across-the-board
No. 08-2724 13

wage increase in 1995, it is not clear that those funds

would have been distributed in a manner that would

have placed each wronged worker in the position he

would have been in had the 1995 wage increase been

awarded. The Board points to no evidence that the Company’s 1996 wage increases took this consideration into

account. Indeed, the parties seem to agree that, when it

implemented the 1996 wage increases, the Company

simply ascertained the 1995 base wage of the employee,

excluding the wrongfully withheld increase, and added to

that amount whatever merit-based wage increase it

deemed appropriate under its new method.

In the same vein, the Board also submits that, if the

wronged workers had received the twenty-five-cent-perhour wage increase wrongfully withheld in 1995, they

well might not have received the merit increases that

were distributed in 1996. This argument is speculative,

and, contrary to the Board’s suggestion, the wronged

workers should not have to bear the burden of any ambiguity in this respect. After all, the ambiguity is the result

of the Company’s illegal withholding of the 1995 increase. Therefore the Company, not the individual worker,

must bear any loss from the lack of available evidence.

Because it violated the law, the Company did not compute

correctly the 1995 base wage of each worker; because it

violated the law, the Company is not in a position to show

whether the pool of funds available for the 1996 merit

increases included all of the money that it would have

distributed in 1995 had it acted legally; because it

violated the law, the Company is unable to show

whether, in 1996 and subsequent years, every wronged
14 No. 08-2724

employee received a wage increase equal to the raise

wrongfully denied him in 1995 and the amount that

would have been awarded him under the merit- and

training-based program. The Company, not the workers,

must bear any loss for the Company’s illegal activity.

Conclusion

The Board’s interpretation of our earlier opinion is

erroneous. Its factual conclusions are unsupported by

the evidence in the record. Therefore, because the

Board’s remedial order is based on an error of law and an

unsubstantiated finding of fact, we must grant UEW’s

petition for review and set aside the Board’s order. Accordingly, we grant the petition for review, set aside the

Board’s order and remand the case to the Board for proceedings consistent with this opinion.

PETITION GRANTED;

ORDER SET ASIDE; CASE REMANDED

9-2-09