Opinion ID: 392028
Heading Depth: 2
Heading Rank: 1

Heading: Reneging on Bargaining Commitments

Text: 63 In appropriate circumstances, a party's reneging on commitments already made in ongoing negotiations may be held to violate § 8(a)(5). R. Gorman, supra, at 408. As Professor Gorman explains, 64 If, for example, a tentative agreement is reached on a number of bargaining items, a refusal to honor that agreement at a later date without good reason may be viewed as an indicator of bad faith. Thus, if the employer ... repudiates understandings already arrived at, abruptly changes its positions without any announced reason, or interposes new demands not raised earlier, this conduct will destroy not only amicability at the bargaining table but also the premises on which bargaining had progressed, and will protract the negotiations and delay settlement. 65 Id. (emphasis added). See, e. g., San Antonio Machine & Supply Corp. v. NLRB, 363 F.2d 633, 641 (5th Cir. 1966) (significant reversal of position on seniority clause indicative of a lack of good faith). 66 However, by showing that the earlier negotiations had not clearly resulted in agreement, or that an earlier understanding was intended to be conditioned on the resolution of other disputed issues, or that there were other good reasons to modify one's bargaining position a party may negate a finding of bad faith bargaining. R. Gorman, supra, at 409. See Food Service Co., 202 NLRB 790, 803 (1973). Cf. NLRB v. Randle-Eastern Ambulance Service, Inc., 584 F.2d 720, 726 (5th Cir. 1978) (context of shifting balance of bargaining strength justified company's withdrawal of previously agreed-to proposals; Board's § 8(a)(5) finding reversed); NLRB v. Tomco Communications, Inc., 567 F.2d 871, 883 (9th Cir. 1978) (distinguishing offers from concessions; Absent abuse not present here, it is perfectly legitimate for a party to retract a proposal before the other side has accepted it.). 67 Both on due process grounds and because it is not supported by substantial evidence, we reverse the ALJ's finding that the company's alleged reneging violated § 8(a)(5). First of all, there was no such charge in the amended complaint. 17 The reason for this omission becomes clear upon a careful examination of certain exhibits in the record. In a charge filed on June 8, 1976, the union alleged that the company had engaged in an unlawful course of conduct, including but not limited to its announcement of a change of position with respect to items previously agreed on. The Regional Director refused to issue a complaint on this charge. By letter of February 23, 1977, in affirming the Regional Director's refusal to issue a complaint on this charge, the Board's General Counsel stated, absent bad faith, which we do not find here, an Employer, following a strike, may lawfully repudiate previously-made bargaining concessions (emphasis added). Secondly, there was testimony by negotiators for both the company and the union, not discredited, contradicted, or even mentioned by the ALJ, that the parties were negotiating subject to a mutual initial understanding that all agreements on noneconomic issues were tentative until a final agreement had been reached on all issues. Finally, a withdrawal of a previous agreement is indicative of bad faith bargaining only where such action is arbitrary and not supported by a reasonable justification. Here, the company's change of position with respect to the number of wage zones was based on its plan, also announced at the May 6 negotiating session, to close SGG's Lewiston and Waterville warehouses for economic reasons, leaving only two bases of operations (Portland and Bangor) for SGG. Thus, it cannot be said that the company modified its position without good reason. 18 B. Unilateral Action Generally 68 In general, an employer's unilateral action with respect to mandatory subjects of collective bargaining under a collective bargaining agreement is considered an unlawful refusal to bargain. (A)n employer's unilateral change in conditions of employment under negotiation is ... a violation of § 8(a)(5), for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8(a)(5) much as does a flat refusal. NLRB v. Katz, 369 U.S. 736, 743, 82 S.Ct. 1107, 1111, 8 L.Ed.2d 230 (1962) (unilateral changes regarding automatic wage increases, sick leave benefits, and merit pay increases during contract negotiations). Perhaps the leading case on unilateral action is Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964), which held that a company's contracting out of all plant maintenance work previously done by bargaining unit employees, without bargaining, violated § 8(a)(5), where unit employees were replaced by those of an independent contractor doing the same work. The Court reasoned that since the Company's decision did not alter (its) basic operation, ... to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business, 379 U.S. at 213, 85 S.Ct. at 404; and that national labor policy required that the union be afforded an opportunity to meet management's legitimate complaints that its maintenance was unduly costly. Id. at 214, 85 S.Ct. at 405. 69 In NLRB v. W.R. Grace & Co., 571 F.2d 279, 282 (5th Cir. 1978), the court stated: 70 It is well-settled that an employer violates its duty to bargain collectively when it institutes changes in employment conditions without first consulting the union .... (However,) (t)he employer's power to alter working conditions in his plant is not contingent upon union agreement with his proposed change. The company has only to notify the union before effecting the change so as to give the union a meaningful chance to offer counter-proposals and counter-arguments. 71 (emphasis added; citations omitted) In Grace, which involved the company's decision to discontinue a product for economic reasons, with layoffs and elimination of a shift, the court held: The failure to notify or refusal to bargain with the union over the effects of management decisions to limit production or otherwise alter operations violates Section 8(a)(5) and (1) of the Act. Id. at 283. 72 Good faith bargaining requires timely notice and a meaningful opportunity to bargain regarding the employer's proposed changes in working conditions, since  '(n)o genuine bargaining ... can be conducted where (the) decision has already been made and implemented.'  International Ladies Garment Workers Union v. NLRB, 463 F.2d 907, 919 (D.C.Cir.1972). Thus, (n)otice of a fait accompli, regarding a matter as to which the employer is obligated to bargain to impasse, violates § 8(a)(5). Id.; see Metromedia, Inc., KMBC-TV v. NLRB, 586 F.2d 1182, 1189 (8th Cir. 1978). 73 As is clear from the above discussion, in some contexts an employer's unilateral action ordinarily will not violate § 8(a)(5). These situations include unilateral actions where: (1) they relate to matters outside the mandatory bargaining subjects, such as the wages of non-unit, non-union employees, Allied Chemical Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 171-78, 92 S.Ct. 383, 393-397, 30 L.Ed.2d 341 (1971) (collective bargaining obligation under § 8(d) extends only to terms and conditions of employment of employees in appropriate bargaining unit); (2) the employer has bargained in good faith to impasse on the issue, e. g., NLRB v. U.S. Sonics Corp., 312 F.2d 610, 615 (1st Cir. 1963); (3) the changes merely preserve the dynamic status quo, consistently with past policies and practices, see R. Gorman, supra, at 450-54; (4) the union has made a clear and unmistakable waiver of its right to bargain on the issue, e. g., Metromedia, supra, 586 F.2d at 1189; R. Gorman, supra, at 466-69; and (5) the actions concern certain major business decisions involving fundamental changes in the scope, nature, or mode of operation of the business, or the commitment of investment capital, see Machinists and Aerospace Workers v. Northeast Airlines, Inc., 473 F.2d 549, 557 (1st Cir.), cert. denied, 409 U.S. 845, 93 S.Ct. 48, 34 L.Ed.2d 85 (1972) (no duty to bargain regarding merger); Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263, 268-69, 85 S.Ct. 994, 998-999, 13 L.Ed.2d 827 (1965) (closing entire business not unfair labor practice; some employer decisions are so peculiarly matters of management prerogative that they would never constitute violations of § 8(a) (1)). See generally R. Gorman, supra, at 443-45. The applicability of these exceptions is discussed below. C. The Warehouse Closing 74 As quoted above, the ALJ found that the company violated § 8(a)(5) and (1) by unilaterally closing its Lewiston-Waterville operations without fully revealing and discussing all the effects of this closure on the employees. The ALJ found, in support of this conclusion, that by the May 6, 1976 bargaining session, (t)he Respondent had already decided to close its Lewiston-Waterville facility and work the crews from their homes, and that at the May 6 session the company presented the Union with a fait accompli, Lewiston-Waterville was closing, and the crews were going to work out of their homes. With regard to bargaining on the subject, the ALJ found that 75 (a)lthough it then discussed with the Union some of the effects of the closing ... on the employees, there was no meaningful bargaining since Respondent had unilaterally decided upon the effects as well. Furthermore, Respondent did not discuss all of those effects, which included its planned (SGR) operations. Thus, the Respondent unilaterally changed important working conditions of its bargaining unit employees at Lewiston-Waterville without advance notice and bargaining about all of the important effects of this decision on its employees. 76 A subcategory of the law of unilateral actions involves the special problem of plant closings. As summarized by Professor Gorman, 77 (R)egardless of whether the employer is obligated to bargain about such major decisions as going out of business, closing down one of several plants, or subcontracting work currently done by its employees, it must bargain about the effects or impact of those decisions, such as severance pay or transfer to other company jobs or locations. 78 R. Gorman, supra, at 499 (emphasis added). Thus, there is an important distinction between the duty to bargain about a particular business decision affecting unit employees and the duty to bargain about the decision's effects on the unit employees; a distinction which at times is difficult to draw. In this case, however, it is only bargaining with respect to the decision's effects, not the underlying decision, 19 that is at issue. 79 In a number of cases involving business changes such as the termination of a particular product line or the closing of one of several plants, courts have held that the employer is required to give the union notice and the opportunity to bargain with respect to the effects of the decision on unit employees before implementing the change. E. g., NLRB v. W.R. Grace & Co., supra, 571 F.2d 279 (product discontinuation, with layoffs and shift changes); International Union, UAW v. NLRB, 470 F.2d 422 (D.C.Cir.1972) (sale of factory-owned truck dealership with terminations of all employees; no violation where company official discussed and attempted to mitigate effects with union on and after date of transfer); Ladies Garment Workers v. NLRB, supra, 463 F.2d 907 (plant relocation; under circumstances notice and bargaining regarding both decision and effects required); NLRB v. Acme Industrial Products, Inc., 439 F.2d 40 (6th Cir. 1971) (relocation of part of manufacturing operations from old to new plant for economic reasons; no violations where employer stands ready to negotiate with the Union in respect to any and all (effects) of its move); Weltronic Co. v. NLRB, 419 F.2d 1120 (6th Cir. 1969) (transfer of electronic assembly work from union to nonunion plant, with no layoffs), cert. denied, 398 U.S. 938, 90 S.Ct. 1841, 26 L.Ed.2d 270 (1970). Nevertheless, as this court observed in Northeast Airlines, supra (t)o allow the Union to force a company to bargain about the effects of its management decisions to the extent of forcing it to forego the proposed change in operations would be in effect to take away from it the freedom to make the decision in the first place. 473 F.2d at 558. 80 A threshold issue is whether petitioners had sufficient notice that the plant closing was in issue, and whether this issue was fully litigated so as to comport with due process. As noted above, there is no mention of the Lewiston-Waterville plant closing as an § 8(a)(5) violation in the amended complaint. 20 However, in this instance we hold that the plant closing issue was fully and fairly litigated. Several witnesses were questioned by both counsel as to the reasons for, and timing, announcement, implementation, permanency, and bargaining table discussion of the Lewiston-Waterville closing. There is no merit to the company's argument that due process was not afforded with respect to this issue. 81 The above-quoted passages from the ALJ's opinion, p. 1085 supra, make clear that the § 8(a)(5) violation found was a matter of degree rather than a per se refusal to bargain. There is no finding that the company completely failed or refused to discuss the effects of the closing decision upon the affected employees. Indeed there appears to be no dispute that the subject of the treatment of the employees was discussed by both sides at some length at the May 6 and 7 sessions (including discussions of combining seniority lists, superseniority, and travel pay), and that no agreement was ever reached on the subject. 21 What the ALJ found was that the company announced the closing without fully revealing and discussing all the effects of this closure on the employees, and that although the company  'discussed' with the Union some of the effects after the announcement, there was no meaningful bargaining since the company had already unilaterally decided upon the effects as well (emphasis added). Among the effects omitted from discussion by the company was its planned (SGR) operations. 22 Thus, the sense of the Board's finding seems to be that the company merely went through the motions of bargaining regarding the effects of the Lewiston-Waterville closing while in fact having made up its corporate mind what it would do with the affected employees in essence a finding of surface bargaining. It is not the company's refusal to bargain regarding effects, but rather its state of mind while ostensibly doing so subjective bad faith that apparently was found to be an unfair labor practice. 82 Our careful examination of the record discloses no support for the ALJ's inference of bad faith bargaining with respect to the Lewiston-Waterville plant closings. The company manifestly offered to discuss the effects of this operational change on unit employees, offered three proposals on the subject, and bargaining in fact did occur. The fact that no agreement was ever reached is indicative, in this context, not of the company's refusal to bargain in good faith on the issue, but of bona fide bargaining to impasse. The union was given a meaningful chance to offer counter-proposals and counter-arguments to the company's effects proposals. NLRB v. W. R. Grace & Co., supra, 571 F.2d at 282. That is all the Act requires. We find no evidence that the company merely engag(ed) the union in sham discussion, Ladies Garment Workers, supra, 463 F.2d at 917. 83 An argument of somewhat more substance is that the company implemented the plant closing decision before it had bargained to impasse with the union on the effects issue that when announced the closing decision, its implementation, and its effects on employees were already accomplished. The testimony of the various company witnesses establishes that the closing decision was made and became final in early May, prior to May 6; was announced to Kenwood Kimball, the SGG Lewiston branch manager, during the first week in May by SGG president Edward Churchill; and that the actual closing took place between May 12 and May 15. In the interim the lengthy May 6 and May 7 bargaining sessions were held, with no agreement as to the treatment of the Lewiston and Waterville crews. Thereafter, the union adhered to the position that the company could not close the warehouses, and at the next session on May 25 took the position that everything was settled except wages. Although the ALJ discredited testimony that union negotiator Holcroft stated at the close of negotiations on May 7 that the parties were at an impasse, one could reasonably conclude that an impasse had been reached at least as to the closing/effects issue. 84 In any event, irrespective of the precise dates of impasse and implementation of the closings, it is clear that the company could not have implemented its proposed effects of the closings i. e., having the men report to jobs directly from their homes until June 1976 or later, because at the time of all these events SGG had no active employees. All were on strike, and no replacements were hired for the Lewiston-Waterville operation until late May. 23 Hence, it is somewhat illusory to talk of the effects of the plant closing upon members of the bargaining unit, who while on strike were not concretely affected at all. Under these circumstances, where the company did offer to bargain in good faith about the effects of the operational change upon bargaining unit employees before any changes were actually implemented, we hold that no violation of § 8(a)(5) or (1) occurred. D. Diversion of Bargaining Unit Work 85 The ALJ found that the company also violated § 8(a)(5) and (1) by unilaterally and permanently assigning bargaining unit (glass) replacement work to (SGR) .... In support of this conclusion the ALJ found that 86 the corporate reorganization and its effect on the bargaining unit remained concealed until completed and sprung upon the Union's negotiators also as a fait accompli at the August 6 bargaining session. It was then the Union learned for the first time ... that these changes were in force and that all of SGG's bargaining unit replacement work had been permanently lost to the nonunion (SGR). 87 It is clear that (t)he preservation or diversion of unit work constitutes a term (or) condition of employment subject to mandatory bargaining under § 8(d) of the Act. NLRB v. Rockwell-Standard Corp., 410 F.2d 953, 957 (6th Cir. 1969). The employer must bargain with respect to the decision to remove work from bargaining unit employees, not merely its effects on the employees. The leading case is Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 209, 85 S.Ct. 398, 402, 13 L.Ed.2d 233 (1964), which held that the employer is required to bargain about contracting out work previously performed by members of the bargaining unit. As discussed above, the Fibreboard Court reasoned that where the operational change would merely reassign work done by existing employees to others (an independent contractor) who would do the same work under similar conditions of employment, it would not unduly impair management prerogative to require bargaining, and that national labor relations policy required that the union be given an opportunity to negotiate a mutually acceptable alternative. Id. at 213-14, 85 S.Ct. at 404-405. In American Cyanamid Co. v. NLRB, 592 F.2d 356 (7th Cir. 1979), the court applied Fibreboard to hold that the employer's decision, during a strike, permanently to contract out maintenance and service work, terminating half of the bargaining unit employees, violated § 8(a)(5) and (1) and converted the strike. The court distinguished permanent contracting out, where bargaining is required, from temporary contracting out to enable the employer to continue operating in an emergency situation thrust upon it by a strike, where it has been held that bargaining was not required. Id. at 360. See Puerto Rico Telephone Co. v. NLRB, 359 F.2d 983, 987 (1st Cir. 1966) (need not bargain about subcontracting to meet some temporary or transient need, ... unless the subcontracting adversely affects the unit's present employees). 88 The record makes clear that some significant portion (but not all) of the outside glass replacement work formerly done exclusively by SGG employees was assigned to the newly-created, nonunion SGR replacement centers at some point during the strike, as part of Charles Soule's corporate reorganization plan, and that at some point this transfer became permanent. Charles Soule testified that he began to set up replacement centers consolidating the former King & Dexter and SOAGCO divisions of SGI in late April, 1976; that technically ... from an accounting standpoint SGR did not begin to exist until June of '76; and that SGR signs first appeared in July or August. Walter Dolbow testified that he first became aware of SGR in mid-May, 1976 when the signs first started being noticed by the strikers. 24 Kenwood Kimball, SGG's Lewiston manager, testified that in mid-May the SGG supervisors stopped doing emergency replacement work, which was taken over by SGR, that SGG started doing exclusively contract work at this time, and that the reason for the transfer was that due to the strike SGG had no men to do the replacement work. Several witnesses testified that once permanent replacements were hired, SGG resumed doing some outside replacement work, but less than before the strike. Charles Soule testified, somewhat equivocally, that the decision to transfer SGG glass replacement work to SGR is and was a permanent decision, and was made in June or July of 1976. The existence of SGR and the company's intention to transfer permanently to SGR SGG's replacement work was first disclosed to the union at the August 6 bargaining session, when attorney Levenson presented an agenda including these and other proposals. The union reacted with what the ALJ characterized as a stunned silence. 89 The issue is whether the company had made a permanent transfer of some portion of SGG's outside glass replacement work to SGR before August 6, with the result that Levenson's purported proposals were really the announcement of a fait accompli. The company argues, inter alia, that the change was not made permanent until some unspecified later date, and that until that time the changes were a temporary response to the exigencies of the strike. The ALJ found otherwise. On this issue the ALJ is on much firmer ground. Substantial evidence supports his inference that the company had already made and implemented its decision by August 6. 90 One indication that the shift of replacement work effectively became permanent prior to August 6 is that only a portion of the replacement work was shifted back to SGG when the hiring of striker replacements during June and July eased SGG's strike-caused labor shortage. Also, apart from the metaphysical question of when a change becomes permanent, there is no evidence that Charles Soule ever intended that his reorganization plan and concomitant new division of labor be instituted on a trial basis, or merely as a temporary response to the strike. Neither the fact that SGG (striker replacement) employees resumed or continued doing some replacement work nor the fact that there was no ultimate decline in the SGG workforce vitiates the conclusion that substantial work was diverted from the bargaining unit. 91 The ALJ's findings, amply supported by the record, thus compel the conclusion that the company failed to give the union notice of its intended action with respect to SGR sufficiently in advance of actual implementation ... to allow reasonable scope for bargaining, Ladies Garment Workers v. NLRB, supra, 463 F.2d at 919. Such unilateral action, without prior bargaining to impasse, violates § 8(a)(5). The company's argument that the union waived bargaining on this issue, either by its silence on August 6 or by virtue of the contractual management rights clause, is without merit. We therefore affirm the ALJ's finding that the diversion of bargaining unit work to SGR, without prior disclosure or bargaining, violated § 8(a)(5) and (1) of the Act. 92 In light of the ALJ's finding that the strike was prolonged by the (company's) unfair labor practices both at and away from the bargaining table subsequent to April 12, it becomes necessary to consider whether the record supports the inference that the company's failure to bargain regarding the transfer of replacement work to SGR converted the strike. We find no evidence that the company's actions with respect to SGR aggravated, changed the focus of, or in any way prolonged the strike. To the extent that the ALJ found to the contrary, such a finding was necessarily based on impermissible speculation and surmise. The only pertinent testimony as to the union's reaction is Walter Dolbow's exaggerated statement that, based on the SGR proposal in the August 6 agenda, they've taken about 90 percent of the work that we did and gave it away. And if we had bought this proposal, we would have been out of work. By contrast, SGG officers Edward Churchill and Andrew Soule testified that before the strike replacement work constituted only ten percent of SGG's workload, and Andrew Soule estimated that it would be about four percent in 1977, a decline attributable in part to the strike, corporate priorities, and a declining overall trend in glazing sales. All that the record shows is that the SGR proposal was unacceptable to the union, that the union made little or no immediate response to Levenson's August 6 presentation, and that in the union's eyes wages continued to be the critical issue at subsequent negotiations. Evidence of prolongation and causation is wholly lacking. Thus, we hold that the record does not support the inference that the company's SGR unfair labor practice converted the strike.