Opinion ID: 739940
Heading Depth: 3
Heading Rank: 2

Heading: The Back Pay Remedy

Text: 44 The Board may impose remedial orders to restore the employment situation as nearly as possible to what it would have been absent unlawful discrimination. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 188, 61 S.Ct. 845, 849-50, 85 L.Ed. 1271 (1941). Reinstatement and back pay are appropriate when a successor refuses to hire its predecessor's employees because of anti-union animus. Golden State Bottling Co. v. NLRB, 414 U.S. 168, 177, 94 S.Ct. 414, 421, 38 L.Ed.2d 388 (1973). The grant of back pay based on pay rates in the predecessor's collective bargaining agreement may be inappropriate, however, when the successor employer shows that it lawfully would not have agreed to the wage scale provided by the predecessor's labor agreement, and the resulting impasse would have resulted in reduced wages. Kallmann, 640 F.2d at 1103; NLRB v. Dent, 534 F.2d 844, 847 (9th Cir.1976). 45 The instant case presents a question of first impression: whether a successor employer who initially refuses to recognize and bargain with a union is required to pay back wages at union-scale rates when the successor employer fails to present evidence that it lawfully would have reduced these rates. This question raises another. Who should bear the burden of proving what would have been the wages, terms and conditions of employment had good-faith collective bargaining between the successor employer and the union actually taken place: the employer who violated the Act, or the Board? 46 The Seventh Circuit has upheld the appropriateness of a status quo ante remedy when a successor employer failed to show that the conditions of employment would have changed had it initially bargained with the unions. U.S. Marine Corp. v. NLRB, 944 F.2d 1305, 1320 (7th Cir.1991) (en banc), cert. denied, 503 U.S. 936, 112 S.Ct. 1474, 117 L.Ed.2d 618 (1992). The court in U.S. Marine Corp. held: 47 Where all or substantially all of the predecessor's employees would have been retained but for the successor's unlawful discrimination, the successor loses the right to set initial terms and conditions of employment and violates the Act if it unilaterally alters the predecessor's terms without first consulting the union. In such cases, the Board may impose a status quo ante remedy to restore the situation to what it would have been absent the successor's unfair labor practice. 48 944 F.2d at 1320. 49 The Seventh Circuit then concluded that  'restoration of the status quo ante following an unfair labor practice is prima facie appropriate.'  Id. at 1323 (quoting North Carolina Coastal Motor Lines Inc., 219 N.L.R.B. 1009, 1010 (1975), enforced, 542 F.2d 637 (4th Cir.1976)). The court found that any uncertainty should be resolved against the employer who discriminates. Id. at 1321. 50 The Seventh Circuit based its decision on the sound premise that a successor employer should not benefit from its wrongdoing. Id. This reasoning was recently echoed by the Second Circuit in NLRB v. Staten Island Hotel, 101 F.3d 858 (2d Cir.1996). The court in Staten Island Hotel explained: 51 Because it was the Company's discriminatory acts that created the uncertainty as to what terms and conditions of employment would have been agreed, we conclude that it was within the discretion of the Board to place on the Company the burden of that uncertainty. The Board's decision to give the discrimination victims the benefit of the doubt is remedial rather than punitive. 52 Id. at 862. 53 We find the reasoning of the Seventh and Second Circuits persuasive. A successor employer who unlawfully refuses to hire Union employees cannot later avoid the terms of its predecessor's collective bargaining agreement by merely asserting that had it in fact engaged in collective bargaining, it would have not agreed to the terms that bound the predecessor employer. If a successor employer chooses to violate the Act, that employer must bear the burden of proving what favorable results good faith collective bargaining would have produced. 54 New Breed does not challenge the reinstatement of Maersk employees, but argues that under Kallmann this court should not award back pay at its predecessor's union-scale rates. New Breed misreads Kallmann insofar as New Breed argues that Kallmann held that back pay at union-scale rates is never appropriate. Rather, in Kallmann we found that the facts demonstrate that [the employer] would not have agreed to union demands to pay the higher rate. Kallmann, 640 F.2d at 1103. We further noted that the employer's refusal to pay the higher rate would not be unlawful. Id. 55 Unlike the employer in Kallmann, New Breed has presented no evidence suggesting that, had it initially bargained in good faith with the Unions, the terms of employment would have differed from the union-negotiated conditions accepted by Maersk. The record is devoid of any evidence that the employees' wages would have changed had New Breed initially recognized and bargained with the Unions. When pressed in oral argument, New Breed's counsel was unable to refer the court to any evidence that bargaining between New Breed and the Unions would have resulted in different terms. 56 New Breed has failed to shoulder its evidentiary burden. We therefore conclude that the Board's grant of back pay based on the predecessor's Union pay scale restores as nearly as possible the employment situation that would have occurred absent New Breed's discrimination against the Union employees. Accordingly, we conclude that the Board's remedy is appropriate.