Opinion ID: 794344
Heading Depth: 2
Heading Rank: 1

Heading: Whether the Company's assertions constituted a claim of inability to pay

Text: 27 We first consider whether the Company's actions triggered a duty that required the Company to disclose its financial records. We must determine whether the essential core of the [company's] bargaining posture as a whole, as expressed to the Union, was grounded in assertions amounting to a claim that it could not economically afford to pay for the Union's proposals. Rivera-Vega, 70 F.3d at 160 (quoting The Shell Co., 313 N.L.R.B. 133, 133 (1993)). 4 We ascertain the Company's intent from the substance of the employer's bargaining position, not the formal words used by the employer. Id. at 159. Indeed, it is often recognized that [a]lthough no magic words are required to express an inability to pay, the words and conduct must be specific enough to convey such a meaning. . . . United Paperworkers Int'l Union v. NLRB, 981 F.2d 861, 865 (6th Cir.1992) (quoting Harvstone Mfg. Corp., 785 F.2d at 575); see also New York Printing Pressmen Union No. 51 v. NLRB, 538 F.2d 496, 500 (2d Cir.1976) (So long as the Employer's refusal reasonably interpreted is the result of financial inability to meet the employees' demand rather than simple unwillingness to do so, the exact formulation used by the Employer in conveying this message is immaterial.). 28 Here, at the April 29th bargaining session, Ferro asked, So are you saying you cannot afford the Union's proposals? Tan responded, No, I can't. I'd go broke. The Board concluded that Tan's go broke statement did not [rise] to the level of an inability to pay and therefore, that the statement did not trigger the attendant Truitt duty to disclose. We take issue with the Board's conclusion for two reasons. First, the Board too quickly dismissed the fact that I'd go broke represented an inability to pay. Second, the Board's analysis was too narrow and ignored the rest of the statements made by the Company during negotiations. 29 1. When Tan said, No, I can't. I'd go broke she asserted an inability to pay 30 We disagree with the Board's cursory analysis of Tan's statement. The Board limited its analysis of Tan's No, I can't. I'd go broke comment to two isolated statements in its decision. First, the Board stated that the comment was made during the heat of bargaining. Later, the Board noted that the statement was made orally, during the heat of a negotiating session, not reflectively in a letter. Based on those observations alone, the Board determined that Tan's assertion that the Company would go broke did not [rise] to the level of a claimed inability to pay. 31 Purporting to adhere to the Supreme Court's warning against automatically applying the Truitt disclosure requirement, the Board seemed to apply its own per se rule. The Board held, in essence, that a plea of poverty made during the heat of bargaining could never create an employer's duty to disclose corroborative financial documents. The Board misinterprets Truitt's cautionary language, through which the Court warned that not every employer that claimed an inability to pay was required to disclose supporting evidence. See Truitt, 351 U.S. at 153-54, 76 S.Ct. 753. The Court did not hold that oral claims of inability to pay made during bargaining would never trigger the Company's duty to disclose, but that is what the Board seems to imply. The Supreme Court was clear that any claimed inability to pay followed by a refusal to substantiate that inability  may support a finding of a failure to bargain in good faith. Id. at 153, 76 S.Ct. 753 (emphasis added). 32 Here, the Board ignored the obvious fact that Tan proclaimed the Company's inability to pay for increased benefits. Ferro asked, So are you saying you cannot afford the Union's proposals? In response, Tan replied, No, I can't. I'd go broke.  Although no magic words are required to express an inability to pay, United Paperworkers Int'l Union, 981 F.2d at 865, the Company could not have used simpler words to declare that its financial situation was the cause of its refusal. 33 An asserted inability to pay, whether made in writing or orally, is the cornerstone of an alleged Truitt violation. Clear statements of a company's inability to pay cannot be cast aside as abruptly as the Board did here. The Company's statements of inability to pay, i.e., No, I can't. I'd go broke, coupled with its refusal to substantiate, strongly, but do not conclusively, suggest that the company bargained in bad faith, regardless of whether the statement was made during heated negotiations. See Lakeland I, 335 N.L.R.B. at 324-25 (holding oral statements by company sufficient to require disclosure of relevant financial information under Truitt ); Fairhaven Props., Inc. (Central Mgmt. Co.), 314 N.L.R.B. 763, 769 (1994) (holding that where company made statements constituting inability to pay orally at bargaining sessions, company had duty to show its books to the union). We therefore hold that substantial evidence does not support the Board's conclusion that the statement — No, I can't. I'd go broke — itself was not representative of an inability to pay. 34 2. The Board failed to look at the circumstances of the particular case 35 It is clear to us that when Tan said No, I can't. I'd go broke, she communicated to the Union that the Company was unable to pay for the Union's proposals. Viewing that statement in light of the Company's subsequent letters and actions further convinces us that the Company's actual position was one of inability to pay. The Board looked at Tan's statement in isolation, and ignored the Company's other statements, as well as the context of the negotiations. The Board should have considered the Company's communications in full to determine whether the Company's refusal reasonably interpreted [was] the result of financial inability to meet the [Union's] demand. New York Printing Pressmen and Offset Workers Union No. 51, 538 F.2d at 500; see also Truitt, 351 U.S. at 153-54, 76 S.Ct. 753 (explaining that analysis must focus on the circumstances of the particular case). 36 That the Company continued to plead poverty is supported by Tan's subsequent statements to the Union. 5 These communications should be considered when determining the context of the Company's bargaining position. See Lakeland II, 347 F.3d at 962-63 (criticizing Board for failing to consider the entire course of negotiations in determining whether the Company was truly pleading an inability to pay); Harvstone Mfg. Corp., 785 F.2d at 583 (Swygert, J., concurring in part and dissenting in part) (commenting that statements of company viewed within entire bargaining context could lead union rationally to conclude that company was asserting financial inability to pay). Each of the Company's communications, whether oral, in writing, or through action, implied that the company was economically incapable of meeting the Union's requests. 37 In her first attempt to deny that she had said No, I can't. I'd go broke, Tan stated, times are tough . . . in these uncertain economic times, we believe that we need to take a more cautious approach than what you propose. This conveyed that the Company was in a precarious position; it did not want to be more cautious, it needed to be. Also, as Tan later admitted, in response to the Union's requests for increased wages and benefits, she had asked, Have you looked at sales? This question suggests that in light of the Company's poor sales figures, the Company could not reasonably have entertained the Union's requests for increased wages and benefits. Finally, Tan sent an e-mail to Ferro stating that due to unimproved sales and rising inventories, the Company was planning to lay off workers. Tan was again focusing on the severe impact its decreased sales were having on the Company. 38 We also consider a company's conduct when evaluating the actual substance of its position. See United Paperworkers Int'l Union, 981 F.2d at 865; see also The Shell Co., 313 N.L.R.B. at 133 (considering significant the fact that company had expressly referred to steps taken to address its survival, namely that it had instituted a hiring freeze and implemented an early retirement plan). Here, two actions by the Company merit attention. First, during bargaining, Tan proposed reducing benefits, specifically the 401(k) contributions. 6 Tan's stated reasons for reducing the 401(k) contributions were that things were tough, and that the Company would go broke which, as noted, suggest that the Company could not continue paying for the contributions. Second, the Company threatened, and then instituted, an economic layoff of most of the unit employees. The layoff was directly tied to the financial instability of the Company. Thus, the Company did not only state that it could not pay for more benefits; its actions were those of a company that could not sustain itself if forced to pay for the Union's proposals. 39 The obvious interpretation of the Company's conduct was that its financial health was to blame for its refusal to pay for the Union's proposals. The Company opened the door to its plea of poverty when Tan first said No, I can't. I'd go broke, and never wavered from that position in its later communications. In our opinion, there is insufficient evidence to support the Board's conclusion that the Company did not assert an inability to pay. The record shows that, as the ALJ concluded, the Company continued to assert an inability to pay and thus, under Truitt, should have provided corroborative evidence in support of its bargaining position. 40