Opinion ID: 603784
Heading Depth: 2
Heading Rank: 2

Heading: thunderbird

Text: 87 Early in October 1988, Thunderbird representatives, including Spencer Teller, the engineering manager of the paint operation at the Thunderbird plant, met with Vemco personnel at the Vemco facility to establish a plan to evaluate Vemco's capability of painting Thunderbird fascias for the 1989 model year in progress. In October or November, Thunderbird sent Vemco test parts. The first test parts painted by Vemco failed Thunderbird's test for paint adhesion. Schutz wrote to Thunderbird regarding this failure in January of 1989. A second meeting was held with Vemco in early February to evaluate its progress on painting the Thunderbird fascias. At that time, Teller found that paint quality and color appearance were acceptable on parts produced during a subsequent test run, but that masking needed improvement. In mid-February, another meeting was held to re-evaluate Vemco's masking capabilities, and Teller determined at that time that Vemco was capable of producing parts meeting Thunderbird's quality standards. 88 At this meeting, Teller and Schutz also discussed the possibility of having Vemco run the remaining Thunderbird parts on hand without an agreement on price, but with an understanding that once a price was finally agreed upon, it would retroactively apply to these parts. This idea was rejected later the same day; Teller then instructed Schutz to return the parts, which Vemco did. Thunderbird did not proceed to evaluate Vemco's quantity and first time through capabilities. 89 While Teller conducted Thunderbird's quality evaluations, Vemco's sales representative dealt with Richard Berggren, an industrial engineering manager for Ford, on pricing matters. An estimate was submitted to Berggren in November after test parts were first received. Thunderbird considered Vemco's prices to be out of line. In mid-January, Berggren requested an update on the estimate. In late April and in June, Teller also requested a requote. No update was ever submitted, and Vemco never did any Thunderbird work beyond the trial parts it had run. At the hearing, Ford testified that it never told Vemco that Vemco had lost the order. 90 There is general agreement that during the summer and fall of 1988, Vemco was forced to hire many employees above its originally forecast labor needs to compensate for unexpected technical difficulties at plant start-up. Some of these employees were hired for a second shift in December to relieve Vemco's existing work force from extremely long workweeks and to train for the possibility of receiving work from Ford, which would have required a second shift. It is also agreed that by January 1989 Vemco experienced productivity gains resulting from resolution of some of its technical difficulties. This resulted in a shortage of work for its employees; they were cut to a four-day workweek in mid-January. Moreover, because of the overlap of first and second shifts, they often had nothing to do for several hours a day even with a short workweek. There were employee rumors in March that Vemco was going to implement either a three-day workweek or a layoff. 91 Corporate officers testified that they maintained this level of staffing until it finally became clear to them in early March that the anticipated Thunderbird work would not be forthcoming. At that point, Vemco immediately moved to reduce the work force pursuant to groundwork laid for such a reduction between December 1988 and early March 1989. This groundwork is evidenced by, inter alia, a document submitted to BOC by Vemco at the end of January promising a reduction in its work force and in price resulting from productivity gains. 92 The GC contends Vemco testified that Ford informed Vemco it would not be receiving the order in question, whereas Ford testified it never told Vemco it was out of the running for the order. The ALJ resolved this apparent conflict in testimony by specifically crediting Ford's testimony where it seemed to conflict with Vemco's. The ALJ stated: 93 I conclude that [Vemco's] assertion that it learned that it would not receive the Ford business late in February or early March, because of a decision by Ford, is false. Accordingly, its assertion that the loss of the Ford business precipitated the economic necessity of the layoff is also false. 94 Vemco, 1991 WL 181869, at  18. 95 A review of the record as a whole, however, suggests that the conflict in testimony is more apparent than real. The testimony was readily reconcilable and the ALJ's credibility determination unnecessary. The GC states in his brief that Company official Schutz testified that he received a phone call in late February from Ford informing him that the Company [Vemco] had not been chosen, and that the Company would receive official notice thereafter. The GC cites to several pages in the record of Schutz's testimony to support this statement. The record on these pages reveals only the following: 96 On direct examination by counsel for Vemco-- 97 Q When did you personally become aware that Vemco would not be receiving the Ford business? 98 A Around the end of February. 99 Q And you said you learned this, that you would not be receiving it, about the end of February? 100 A Yes. 101 On cross examination by the NLRB-- 102 Q You stated it was around the end of February, the beginning of March when you found out that you were not going to get this contract, is that true? 103 A That's true. 104 Q You testified that you were told by Ford Motor Company that you weren't going to get the contract? 105 A Yes. 106 Q Were you told that with regard to this particular bid? 107 A In regard to ultimately, all of them. 108 Q All of them. Isn't it true, Mr. Schutz, that what you were actually told is that your bids were out of line? 109 A Yes. 110 Q And isn't it also true, Mr. Schutz, that you were told that from the beginning of March, end of February, 1989? 111 A The beginning of March, the end of February, yeah, that's when we found out that we wasn't going to have anymore dealing. 112 (Emphasis added). 113 The record divulges no specific reference in Schutz's testimony to a telephone call or any subsequent official notice. What it does show is that the NLRB pressed Schutz to clarify his testimony regarding what Ford actually told Vemco until it became clear that Vemco considered Ford's rejection of its pricing as the equivalent of official word that it would not be getting the order. Thus, Vemco's testimony is reconcilable with Ford's. 114 Taken in context with other record evidence regarding (1) the March decision made, not by Ford, but by Winget, Torakis, and Schutz, that Vemco was not going to obtain the Thunderbird work and must therefore immediately move to remedy its overstaffing problem; (2) the mid-February telephone call from Teller instructing Vemco to return all parts to Thunderbird; (3) the apparent inability to resolve the pricing problem; and (4) Thunderbird's failure to complete its evaluations, the testimony on which the GC relies does not constitute substantial evidence that Vemco's testimony conflicted with Ford's. Because the record does not support the purported conflict in testimony on which the ALJ relied, we conclude accordingly that Vemco's business justification for the layoff cannot be found to be pretextual on the basis of this nonexistent conflict in testimony. 115 The remaining question is whether substantial record evidence supports a finding of pretext on some other basis. The ALJ acknowledged Vemco was overstaffed at some point in January, but seemed to reject overstaffing as a legitimate basis for the March layoff simply because the layoff did not take place in January. This leads to the implication that the ALJ rejected as pretextual the possibility of obtaining work from Thunderbird, because otherwise this possibility, with its attendant need for a trained second shift, would explain the delay in the layoff and, at the same time, preserve the reality of overstaffing as a legitimate business justification for a layoff. The ALJ, however, implicitly acknowledged that the possibility of obtaining the Thunderbird work was real when he found pretextual Vemco's early March determination that the possibility of getting the Thunderbird work no longer existed. Finally, the ALJ never addressed Vemco's claim that the high cost of retaining employees who were unnecessary to meet current production requirements was a reason for the layoff. 116 Vemco basically contends that when Winget, Schutz, and Torakis concluded in early March that Vemco would not obtain the Thunderbird work, this triggered their subsequent decision that Vemco's overstaffing, with its associated drain on production and finances, mandated a reduction in work force. It appears that once the ALJ rejected as pretextual Vemco's asserted failure to obtain the Thunderbird work, he viewed the overstaffing and associated costs as chronic, rather than critical, problems that could not legitimately support the layoff. 117 We focus our remaining inquiry into Vemco's affirmative defense of lack of work based on its failure to obtain the Thunderbird orders. If this failure is not a pretext for Vemco's early March decision to implement the layoff, it legitimizes not only the decision to lay off employees, but the timing of the layoff as well. At that point there would be no need to analyze Vemco's other business reasons independently. 118 Because we believe Vemco's determination that it had lost the order is plausible given the state of negotiations in early March, we conclude the Board's finding of pretext is generally not supported by substantial evidence. When Ford said Vemco's pricing was out of line, Vemco's management reasonably understood that it could not secure the order at its quoted price. Vemco knew it was not the only bidder on the job; because of this, Vemco would presumably have submitted what it viewed as an attractive price to diminish the risk of not being taken seriously as a contender for Ford's business, or worse, of summarily losing the order to a lower bidder. In other words, Vemco would have been justified in rationalizing from its perspective that if Ford indicated Vemco's price was not simply somewhat high, but was out of line, and if the quoted price did not leave Vemco much room for adjustment, then terms could not be reached on price and Vemco could not obtain the work. 119 The ALJ credited Teller's testimony that since Vemco was capable of producing a quality part by mid-February, it was simply a matter of working out the economics. Vemco, 1991 WL 181869, at  17. He assumed that the ability to work out the economics was a given and disregarded the evidence that Ford and Vemco could not come to an agreement on price as a reason for Vemco's decision not to pursue the elusive work order. The ALJ found instead that Vemco made its decision not to pursue this work for otherwise unexplained reasons. Id. at  18. Finally, he found that Vemco walked away from 10 to 18 million dollars in business, without regard to its invested costs of setting up and running numerous test runs and maintaining an overstaffed plant trained and ready to work, not because it could not reach an agreement on price with Ford, but because of the Union's organizational activity. 120 It makes no sense whatsoever that a sophisticated business management team would, in the aftermath of a financially difficult plant start-up, turn its back on an enormous amount of business from a major automobile manufacturer because of union organizing activity, especially after Vemco had made a substantial investment of time and money quoting, preparing for, and demonstrating it could do the work. Accordingly, we conclude that the NLRB's finding of pretext in Vemco's early March decision that the Thunderbird work would not be forthcoming, in conjunction with its overstaffing and the attendant costs, is generally not supported by substantial record evidence. Vemco met its burden to establish its affirmative defense of legitimate business justification; the mass layoff was therefore not in violation of section 8(a)(3) of the Act.