Opinion ID: 728891
Heading Depth: 2
Heading Rank: 2

Heading: The Employer's Unlawful Granting of Benefits

Text: 24 The second issue before us concerns the Board's finding that Skyline violated section 8(a)(1) of the Act by unilaterally granting wage increases, instituting a new wage scale, and otherwise addressing worker grievances to discourage the maintenance employees from union activities. In NLRB v. Exchange Parts Co., 375 U.S. 405, 84 S.Ct. 457, 11 L.Ed.2d 435 (1964), in considering the legality of economic benefits given in response to a union campaign, the Court held: 25 The danger inherent in well-timed increases in benefits is the suggestion of a fist inside the velvet glove. Employees are not likely to miss the inference that the source of benefits now conferred is also the source from which future benefits must flow and which may dry up if it is not obliged.... [T]he absence of conditions or threats pertaining to the particular benefits conferred would be of controlling significance only if it could be presumed that no question of additional benefits or renegotiation of existing benefits would arise in the future; and, of course, no such presumption is tenable. 26 Id. at 409-10, 84 S.Ct. at 460 (footnote omitted). In the instant case, the ALJ, with the Board's affirmance, found that, although Skyline's decision to lift the wage freeze was lawful because it occurred before the advent of the union campaign, the employer's subsequent decisions to institute a restructured wage scale and grant an increase to maintenance employees were purposely timed to impress [the workers] with their employer's largesse. Skyline Distributors at 8, reprinted in App. 39. She further found that DiBernardino lied in claiming that the grant of benefits had not been timed to affect the maintenance employees' choice for or against unionization. See id. at 7, reprinted in App. 38. According to the ALJ, [b]y engaging in this conduct, which succeeded in wooing the employees away from supporting the Union, [Skyline] violated Section 8(a)(1) of the Act. Id. at 8, reprinted in App. 39. Because there is substantial evidence to support the factual inferences drawn by the ALJ, and because the legal foundation for the finding of an ULP is supported by the Court's decision in Exchange Parts, we cannot disturb the Board's judgment on this point. 27 Although the Board's finding of an ULP must be sustained, it cannot be gainsaid that this finding stands on a shaky foundation. The ALJ found that Skyline officials made the decision to lift the wage freeze before there was any indication that the maintenance employees were considering a union. In other words, the decision to lift the freeze was not designed to influence any workers against joining a union. The problem, according to the ALJ, arose when company officials decided to announce the lifting of the freeze and the accompanying wage increase shortly after learning about the employees' interest in the union. What should the employer have done to avoid this situation? The ALJ thought that the solution was easy: If [Skyline's] officials had the employees' interests uppermost in mind, and were eager to let them know that the freeze was over, a memo distributed to those affected soon after the executive committee met in April would have sufficed. Skyline Distributors at 7 (emphasis added), reprinted in App. 38. But why? There was nothing unlawful about the employer taking a small amount of time between the occasion of the executive committee meeting and the announcement to employees. Obviously, Skyline's officials did not delay to affect a union campaign, because there was no union campaign at the time when the freeze was lifted. And it is difficult to understand the ALJ's suggestion that the employer was somehow uncaring about the employees' grievances in light of her finding that the executive committee had acted promptly to cure increasing discontent among the employees. Id. at 3-4, reprinted in App. 34-35. 28 In any event, what was the employer to do once it learned of the union, having already decided to lift the wage freeze? Should the employer have kept the decision a secret, lest it be accused of unlawfully influencing employee sentiments? If so, for how long? Or should management have merely announced the lifting of the freeze, but declined to take any action that might result in a wage increase for the employees? But this could have been viewed as a threat by the employees, who could have reasonably assumed that no wage increase would be forthcoming absent an abandonment of the union campaign. Or the employer could have done what it did here--announce the prior decision to lift the wage freeze and explain how it would be implemented, knowing full well that the employees could take the money and still vote for a union. When the case is considered in this light, Skyline's argument that the Board is too glib in suggesting that there is a viable distinction between the decision to lift the wage freeze and the timing of its announcement and accompanying wage increase has real force. 29 There are many ironies here. Exchange Parts suggests that employees like those at Skyline are threatened by a fist inside the velvet glove upon receiving benefits that they demand. This is a counterintuitive notion. In support of its principal premise, Exchange Parts says that employees never miss the inference that the source of benefits ... conferred is also the source from which future benefits must flow and which may dry up if it is not obliged. 375 U.S. at 409, 84 S.Ct. at 460. 1 Some scholars have effectively responded, So what? This skeptical reaction to Exchange Parts is better understood if one thinks hard about the situation in this case. In reality, the maintenance employees at Skyline were playing an age-old game, attempting to threaten management with a union to induce the grant of benefits. Their threat succeeded, because the employees got exactly what they wanted, with no acts of reprisal or other adverse actions taken against them. The employees played their cards well: they knew that, even after getting their wage increase and other benefits, they still could have demanded a representation election and voted for a union; and they knew that if the employer was foolish enough to withdraw the grant of benefits, the union could have been recalled. This hardly looks like a situation in which employees were intimidated by the figurative fist inside the velvet glove. 30 Not only is the premise of Exchange Parts counterintuitive, it has been challenged by preeminent labor law scholars, who question whether certain ULPs do in fact adversely affect free and uncoerced choice by workers. For example, in his brilliant article on NLRB elections, Derek Bok argues: 31 It is hard to accept [the] words [of Exchange Parts] at their face value. Surely the employees do not need a wage increase or an extra holiday to inform them that there is a fist within the velvet glove or that the employer who gives may also take away. These lessons have already been learned in many more obvious ways in the ordinary course of employment. And if any employees remain in doubt on this score, the union will certainly have made the matter clear in trying to persuade them that they need the protection of a union. What the Court must have in mind, therefore, is that the granting of benefits necessarily conveys a threat that the employer will exact retribution if the employees vote for the union. 32 As a matter of ordinary experience, this conclusion seems hard to sustain. Wage increases on the eve of an election do not normally suggest retribution, nor are they given with this intent. The employer's motive is much less devious. In granting benefits, he is simply attempting to win favor among the employees and to persuade them that they will receive satisfactory wages and conditions without the assistance of the union. This is the result that the organizer fears. And it is unfortunate that the employer's conduct was not interpreted in this light, for the issues posed go to the heart of the concept of a free or rational choice under the statute. 33 Derek C. Bok, The Regulation of Campaign Tactics in Representation Elections Under the National Labor Relations Act, 78 HARV. L. REV . 38, 113 (1964); see also ROBERT A. GORMAN, BASIC TEXT ON LABOR LAW: UNIONIZATION AND COLLECTIVE BARGAINING 164 (1976) (Although the promise by an employer to grant some special benefit in the event the union is defeated ... has coercive implications, it is not at all clear that the same is true when the employer actually grants benefits during the course of an election campaign, without any conditions and without any suggestion that those benefits will be withdrawn if the union prevails.). 34 Likewise, in Union Representation Elections: Law and Reality, the seminal empirical study on voting behavior of employees in NLRB elections, the authors found the following: 35 It was not possible to test the Supreme Court's [Exchange Parts] theory directly, since most elections in which unlawful benefits were found also included unlawful threats or acts of reprisal. However, any straightforward explanation of the data indicates that the Court's theory is in error. A Board finding that a threat or act of reprisal had occurred was not associated with greater employee perception of threats or acts of reprisal. Moreover, there was no greater perception of reprisals in elections in which benefits occurred together with reprisals than in elections in which no unlawful campaigning was found. The promise or grant of benefits, even in conjunction with reprisals, does not increase the perception of reprisals. There is thus no reason to suppose that a promise or grant of benefits standing alone would lead employees to infer a threat of reprisal if they chose union representation. 36 JULIUS G. GETMAN, STEPHEN B. GOLDBERG & JEANNE B. HERMAN, UNION REPRESENTATION ELECTIONS: LAW AND REALITY 119 (1976). 37 When all is said and done, however, the rule of Exchange Parts remains the law. And we are obliged to enforce this construction of section 8(a)(1) unless and until it is revisited by the Board or the Supreme Court. In this case, there is hardly any doubt that the employer acted in part in response to a union campaign in granting benefits to the maintenance employees. Although this conduct may not have constituted a grave violation of the Act, Exchange Parts makes it clear that the conduct was forbidden.C. The Gissel Bargaining Order 38 In light of the foregoing conclusion that the ULPs in this case were far from serious, it almost goes without saying that the Board had no basis upon which to issue a Gissel bargaining order. As noted at the outset of this opinion, under Gissel, absent outrageous and pervasive ULPs, the Board may issue a bargaining order only if it is found that an employer's ULPs had a tendency to undermine the union's majority status and impede the election process, and the Board determines that the possibility of erasing the effects of the unlawful conduct and ensuring a fair election by the use of traditional remedies is slight and would be better protected by a bargaining order. See Avecor, Inc. v. NLRB, 931 F.2d 924, 934 (D.C.Cir.1991). The Board has not come close to satisfying this standard, for there are no comprehensible findings by the Board that the granting of benefits somehow impeded the election process or that a fair election could not have been ensured by the use of traditional remedies. Indeed, the Board's decision to issue a bargaining order in this case is so lacking in evidentiary support and reasoned decisionmaking that it seems whimsical. 39 In addressing the question of whether an employer's grant of economic inducements, without more, can support the issuance of a Gissel bargaining order, the Board faces several hurdles. The first is the well-established legal requirement that any Gissel order must be fully justified. [A] bargaining order is not a snake-oil cure for whatever ails the workplace; it is an 'extreme remedy' that must be applied with commensurate care. Avecor, 931 F.2d at 938-39 (citation omitted). In Peoples Gas Sys., Inc. v. NLRB, 629 F.2d 35 (D.C.Cir.1980), we said that 40 before we will enforce a bargaining order, we must be able to determine from the Board's opinion (1) that it gave due consideration to the employees' section 7 rights, which are, after all, one of the fundamental purposes of the Act, (2) why it concluded that other purposes must override the rights of the employees to choose their bargaining representatives and (3) why other remedies, less destructive to employees' rights, are not adequate. 41 Id. at 46. The Board continues to ignore these admonitions and, thus, has faced a string of reversals in this circuit. See, e.g., Somerset Welding & Steel, Inc. v. NLRB, 987 F.2d 777 (D.C.Cir.1993); Caterair Int'l v. NLRB, 22 F.3d 1114 (D.C.Cir.1994); Charlotte Amphitheater Corp. v. NLRB, 82 F.3d 1074 (D.C.Cir.1996). This litigation presents yet another instance in which the Board has failed to justify a bargaining order on the terms required by Peoples Gas and Avecor. 42 This case, however, involves much more than a simple failure by the Board to explain its proposed remedy. During oral argument, Board counsel acknowledged that there is almost no judicial authority supporting a Gissel bargaining order based solely on the grant of economic inducements. In our research, we could uncover only one such case, Texaco, Inc. v. NLRB, 436 F.2d 520 (7th Cir.1971), and Board counsel could cite us to no others. Texaco is of little moment, because, in a subsequent decision by the Seventh Circuit, NLRB v. Gruber's Super Market, Inc., 501 F.2d 697 (7th Cir.1974), the court reached a different conclusion, finding that an economic benefit conferred by an employer on its employees did not by itself support a bargaining order. Id. at 705-06. In all other cases that we have found involving economic inducements in which a circuit court has enforced a Gissel-style bargaining order, the employer's ULPs combine an economic inducement with negative acts of reprisal. See, e.g., St. Francis Fed'n of Nurses & Health Prof'ls v. NLRB, 729 F.2d 844, 855 (D.C.Cir.1984) (The Board placed particular emphasis on the unlawful wage increase because it affected all employees, but it also relied upon the whole litany of unfair labor practices that characterized the Hospital's anti-Union campaign--interrogations, threats, and promises of benefits.). 43 Although it is undoubtedly difficult to state a firm list of requirements that must be met in order to support a Gissel bargaining order, it is not difficult to fathom that those requirements typically have involved more than just the grant of economic benefits. One authority has attempted to summarize the case law on this point, as follows:Some principles can ... be deduced from the Board's opinions. First, an unfair labor practice that is viewed as deliberate or calculated is more likely to lead to a bargaining order than one that is not. Second, much turns on the significance of the interest being endangered. If the employer's statements or acts can be characterized as threatening either a significant economic interest, such as retention of jobs, or a fundamental legal right, it is more likely to lead to a bargaining order. Third, acts of reprisal, particularly discharges, are considered to be extremely effective in swaying votes and very difficult to remedy. Not only is there a great deal of language to this effect in Board opinions, but also the coincidence of section 8(a)(3) violations and bargaining orders is notable. Fourth, promises to correct the grievance that led to union organization are also considered particularly effective. Finally, and most significantly, the vast majority of bargaining order cases involve a series of unfair labor practices rather than a single act of illegality. 44 JULIUS G. GETMAN & BRETRAND B. POGREBIN, LABOR RELATIONS: THE BASIC PROCESSES, LAW AND PRACTICE 76 (1988) (footnotes omitted). 2 Our view of the case law is consistent with this summary. This being so, the Board cannot simply abandon this long line of contrary authority with no explanation. If the Board in future cases believes that a bargaining order should issue in a case involving nothing more than the grant of economic benefits, then it must explain why it is necessary and it must also distinguish the case law that appears to militate against such a remedy. 45 Finally, and most importantly, the Board's bargaining order cannot be enforced in this case because the Board has given no credence whatsoever to employee free choice. One of the principal protections of the NLRA is the right of employees to bargain collectively through representatives of their own choosing or to refrain from such activity. See International Ladies' Garment Workers' Union v. NLRB, 366 U.S. 731, 737, 81 S.Ct. 1603, 1607, 6 L.Ed.2d 762 (1961). This is an inviolate right under the NLRA, one that the Court in Gissel did not mean to undermine. See Gissel, 395 U.S. at 614, 89 S.Ct. at 1940 (effectuating ascertainable employee free choice becomes as important a goal as deterring employer misbehavior). In other words, [t]he Court thus anchored its holding in Gissel to the NLRA's core principle that a majority of employees should be free to accept or reject union representation. Conair Corp. v. NLRB, 721 F.2d 1355, 1380-81 (D.C.Cir.1983). 46 The courts have been strict in requiring the Board to justify Gissel bargaining orders, in part, because employees lose the final say over whether to endorse or reject unionization with the issuance of a bargaining order. Since this final choice is a core right under the NLRA, a Gissel bargaining order is necessarily seen to be an extreme remedy, Avecor, 931 F.2d at 939, which is justified only in exceptional circumstances. Charlotte Amphitheater, 82 F.3d at 1080. 47 It is hard to see how the issuance of a Gissel bargaining order based solely on the grant of economic benefits can be squared with principles of employee free choice. Derek Bok's article convincingly asserts that: 48 the choice protected by the NLRA is one which permits the employees to determine whether their own best interests will be better served with or without a union. In making this decision, the employee will pay little heed to whether favorable conditions are maintained by the employer to keep out the union or for some independent business purpose, for he will benefit equally in either case. Indeed, countless employees have profited from wage increases and improvements which are regularly granted by employers to diminish the threat of some future organizational drive. No one has attempted to prevent employers from pursuing this policy, and one can even argue that it is consistent with the purposes expressed in section I of the act. In terms of free choice, therefore, the problem with benefits granted during an organizational campaign is not that they are designed to defeat the union. 49 Derek C. Bok, The Regulation of Campaign Tactics in Representation Elections Under the National Labor Relations Act, 78 HARV. L. REV . 38, 113-14 (footnote omitted). The Board never addresses this question, and it is one among many that must be faced if the Board seeks in the future to replicate the action taken in this case. 50 At bottom, we find no basis for the Gissel bargaining order in the record before us. Although we reverse the decision of the Board, we do not mean to adopt any per se rule. The Board will be free to grapple with the question of the appropriateness of a Gissel bargaining order based solely on the grant of economic benefits as it sees fit in the future. In this case, however, there is no showing either that Skyline's grant of benefits somehow impeded the election process or that a fair election could not have been ensured by the use of traditional remedies.