Court Opinion

ID: 203692
Source: CourtListenerOpinion
Date Created: 2011-02-07 06:21:35+00
Date Added: 2024-06-11T17:27:38.926034
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 08-1351

                PAN AMERICAN GRAIN CO., INC. and
         PAN AMERICAN GRAIN MANUFACTURING COMPANY, INC.,

                 Petitioners, Cross-Respondents,

                                v.

                 NATIONAL LABOR RELATIONS BOARD,

                  Respondent, Cross-Petitioner.

              ON PETITION FOR REVIEW OF AN ORDER OF
                THE NATIONAL LABOR RELATIONS BOARD

                              Before

                    Boudin, Stahl, and Lipez,
                         Circuit Judges.

     Rafael J. Lopez with whom Ruperto J. Robles was on brief for
petitioner.
     Greg P. Lauro with whom Meredith L. Jason, Ronald Meisburg,
General Counsel, John E. Higgins, Jr., Deputy General Counsel, John
H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy
Associate General Counsel, and National Labor Relations Board were
on brief for Respondent, Cross-Petitioner.

                        February 24, 2009
               STAHL, Circuit Judge.            Pan American Grain Company, Inc.

and Pan American Grain Manufacturing Company (collectively, "Pan

American" or "the company")1 petition this court to set aside an

order of the National Labor Relations Board ("the Board").                             The

Board       submits    a   cross-application          to    enforce    its    order.     We

previously vacated and remanded the Board's order finding that Pan

American, a Puerto Rican company, committed violations under the

National Labor Relations Act ("the Act"), 29 U.S.C. §§ 151 et seq.,

when it did not provide its employees with adequate notice and a

reasonable       opportunity         to   bargain          before    imposing      layoffs.

N.L.R.B. v. Pan Am. Grain Co., 432 F.3d 69 (1st Cir. 2005).                            Now,

satisfied with the Board's supplemental decision and order issued

in response to our remand, we deny Pan American's petition for

review and grant the Board's cross-application for enforcement.

                                            I.

               The background facts of this case are discussed at

greater length in our first examination of the Board's order, see

id., and here, we relate them summarily.                            On January 8, 2002,

employees at two Pan American facilities began a strike after

negotiations          failed    at    reaching    a    new       collective     bargaining

agreement       between       Pan    American    and       the   exclusive      bargaining

representative          for    its    employees,       the       Congreso     de    Uniones

        1
       Pan American Grain Company, Inc. and Pan American Grain
Manufacturing Company are affiliated business enterprises and share
officers, directors, and a common policy for operations.

                                           -2-
Industriales de Puerto Rico ("the Union").                   That same month,

company president Jose Gonzalez spoke with two nonstriking truck

drivers; during the conversation, Gonzalez stated that he "would

rather close the company" than reach an agreement with the striking

employees, called the strikers "jerks" and "sons of bitches," and

indicated he would not be concerned if it cost $2 million to rid

the company of them.       On February 27, 2002, Pan American notified

the   Union    that   it   had   decided    to   lay   off   fifteen   striking

employees.     A letter from Pan American to the Union, dated the same

day, stated that the layoffs were "due to economic reasons and as

a result of a substantial decrease in production and sales."

Gonzalez later confirmed that sales dropped in January and February

2002 and conceded that the reduced level of sales caused the

company to require "a lower work force."

              Previously, in 1996, Pan American had begun to modernize

its facilities' equipment to satisfy an environmental order which

required significant changes in how the company conducted its

business operations.         The modernization resulted in decreased

staffing needs and a reduction of one or two employees in each

succeeding year.       After the February 27 layoffs, Pan American

initially did not cite its modernization program as a reason for

the layoffs.      But after the Union filed unfair labor charges with

the Board, Pan American contended before a Board administrative law

                                      -3-
judge    ("ALJ")     that   the     layoffs   were     attributable     to     the

modernization program.

           After a thirty-two-day trial, the ALJ found that Pan

American had violated the Act "by implementing the February 27

layoff without giving the Union adequate notice and reasonable

opportunity to bargain."2         Although the ALJ found the evidence of

modernization       and   automation      compelling    enough   to    rebut    a

discrimination      claim   under    29   U.S.C.   §   158(a)(3),     the    judge

determined    the    striking     employees   were     engaged   in   protected

activity, found that antiunion animus existed, and noted that the

timing of the layoffs in relation to the commencement of the strike

was "somewhat suspicious" in reaching his conclusion that Pan

American's February 27 layoffs violated the Act under 29 U.S.C. §

158(a)(5).3   As a remedy for the violation, the ALJ ordered full

backpay to and reinstatement of the fifteen employees.                The Board

affirmed the ALJ's ruling and adopted the recommended order.

     2
       The Union alleged other violations, roughly half of which
the ALJ found substantiated. These violations are not at issue in
the instant appeal as Pan American has not contested them. See Pan
Am. Grain, 432 F.3d at 71, n.2.
     3
       "It shall be an unfair labor practice for an employer--to
refuse to bargain collectively with the representatives of his
employees."   29 U.S.C. § 158(a)(5).    See also id. at § 158(d)
("[T]o bargain collectively is the performance of the mutual
obligation of the employer and the representative of the employees
to meet at reasonable times and confer in good faith with respect
to wages, hours, and other terms and conditions of employment.").

                                       -4-
            On its first appeal to this court, Pan American asserted

that because of the role of its modernization program in the

layoffs, it was not required to bargain over the decision to

terminate the fifteen employees, only over the effects of the

layoffs, see generally First Nat'l Maint. Corp. v. N.L.R.B., 452

U.S. 666 (1981), and that the appropriate remedy therefore was

limited backpay as prescribed in Transmarine Navigation Corp., 170

N.L.R.B. 389 (1968).      A majority of the panel4 held that the Board

had not sufficiently explained why Pan American had to bargain over

a decision motivated both by reduced sales and a modernization

program.    Pan Am. Grain Co., 432 F.3d at 74.        We thus remanded the

case to the Board for clarification of how multiple motives for a

layoff     should   be   analyzed     and   whether    the   Board    viewed

modernization decisions as mandatory subjects of bargaining.

            In its supplemental decision and order, the Board found

that "a combination of factors, including a substantial reduction

in sales in January and February 2002. . . coinciding with the . .

. strike" led to the February 27 layoffs such that the layoffs were

motivated     by    reasons   other     than   efficiency     gains    from

modernization.      The Board held that "because [Pan American] failed

     4
       The dissent argued that Pan American's objections before the
Board were insufficient to apprise the Board that the company would
later argue that it had no duty to bargain about the decision. Pan
American Grain Co., 432 F.3d at 75 (Stahl, J., dissenting). On
remand, the Board observed that it too had understood Pan
American's argument to be waived by its failure to present the
argument to the Board in its exceptions to the ALJ's decision.

                                    -5-
to establish it would have implemented any particular layoff solely

as a result of modernization and even in the absence of its

economic reasons, [it] had a duty to bargain over the February 27

layoff decision."       The Board noted that it would have addressed

this court's question of whether a company must bargain over

layoffs arising solely because of modernization had Pan American

established that any particular layoff was based exclusively on the

modernization program.        Based on this reasoning, the Board again

found that Pan American had a duty to bargain with the Union over

the decision to lay off fifteen employees, which "unquestionably

affected the terms of unit employees' employment in a material and

substantial     way,"   and    held    that    the   company's    unilateral

implementation of the layoffs violated Sections 8(a)(5) and (1) of

the Act.   The Board again ordered a full backpay remedy.

                                      II.

           We now consider whether the Board complied with our

remand and sufficiently clarified its reasoning such that its

finding that Pan American violated Sections 8(a)(5) and (1) of the

Act and the subsequent remedial order are justified. The Board has

the   primary   responsibility     for      determining   the   scope   of   an

employer's statutory duty to bargain, Ford Motor Co. v. N.L.R.B.,

441 U.S. 488, 496 (1979), and we will affirm the Board's statutory

construction so long as it is "reasonably defensible," id. at 497.

See Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488 (1951)

                                      -6-
("[A] court may [not] displace the Board's choice between two

fairly conflicting views, even though the court would justifiably

have made a different choice had the matter been before it de

novo.").   We treat the factual findings of the Board as conclusive

if supported by substantial evidence on the record. Id. at 477-78;

29 U.S.C. §§ 160(e), (f).          And because "the Act has granted the

Board wide discretion in fashioning remedies," N.L.R.B. v. Mount

Desert Island Hosp., 695 F.2d 634, 642 (1st Cir. 1982), we will not

disturb a remedial order "unless it can be shown that the order is

a patent attempt to achieve ends other than those which can fairly

be said to effectuate the policies of the Act."          N.L.R.B. v. Otis

Hosp., 545 F.2d 252, 257 (1st Cir. 1976) (quoting Va. Elec. & Power

Co. v. N.L.R.B., 319 U.S. 533, 540 (1943)).

           Under the Act, an employer must bargain collectively with

the   representative    of   its   employees   over   decisions    affecting

"wages, hours, and other terms and conditions of employment."            29

U.S.C. § 158(d); N.L.R.B. v. Wooster Div. of Borg-Warner Corp., 356

U.S. 342, 349 (1958).        An employer violates this duty when he

changes a mandatory term or condition of employment without giving

the employees' representative adequate notice and an opportunity to

bargain.   N.L.R.B. v. Katz, 369 U.S. 736, 745-46 (1962); see 29

U.S.C. § 158(d).

           Evaluating the scope of mandatory subjects of bargaining,

the   Supreme   Court   identified     three   categories   of    management

                                     -7-
decisions in First National Maintenance Corp., 452 U.S. 666.

Decisions     that     affect     the     employment          relationship     only

tangentially, such as advertising and product design, are not

mandatory subjects of bargaining.                Id. at 676-77.           Decisions

directly affecting the relationship -- wages, working conditions,

and the like -- are mandatory subjects of bargaining.                    Id. at 677.

This requirement ensures that when an employer aims to reduce labor

costs, employees are presented with the opportunity to negotiate

concessions    that    reduce    overall      costs     and    thus   spare   jobs.

Fibreboard Paper Prod. Corp. v. N.L.R.B., 379 U.S. 203, 213-14

(1964). Finally, some management decisions have a direct impact on

employment but focus on economic profitability rather than the

employment relationship.         First Nat'l Maint. Corp., 452 U.S. at

677.     An employer need not bargain over a decision "involving a

change in the scope and direction of the enterprise" and not

"'primarily about conditions of employment, though the effect of

the decision may be necessarily to terminate employment.'"                      Id.

(quoting Fibreboard Paper Prod. Corp., 379 U.S. at 223 (Stewart,

J., concurring)).      To determine the central thrust of decisions in

this third category for mandatory bargaining purposes, the Court

prescribed a balancing analysis -- "bargaining over management

decisions     that    have   a   substantial      impact      on   the    continued

availability of employment should be required only if the benefit,

for    labor-management      relations     and    the    collective-bargaining

                                        -8-
process,   outweighs   the   burden   placed   on   the   conduct   of   the

business."   Id. at 679.     The Court employed the balancing test to

determine that bargaining was not required in the case before it

but expressly noted that its analysis did not preclude different

outcomes in other cases.     Id. at 686, n.22.5

           In its brief, Pan American contends that the Board did

not comply with this court's remand instruction, see 432 F.3d at

74, requesting clarification on the appropriate analysis for a

multiple motive layoff. Despite Pan American's characterization of

this objection, we find the company is dissatisfied less with the

Board's elucidation than with the result it has reached, namely

that the company is in violation of the             Act for failing to

negotiate over the decision to implement layoffs and liable for a

full backpay remedy.    We address these findings in turn.

           In its most recent decision, the Board explains that an

employer must bargain over a multiple-motive layoff based partially

on labor costs.   See Regal Cinemas, Inc. v. N.L.R.B., 317 F.3d 300,

307-08 (D.C. Cir. 2003) (affirming the Board's finding of a Section

8(a)(5) violation where the layoff was motivated by labor costs

rather than technological advances); Winchell Co., 315 N.L.R.B.

     5
       Indeed, in our remand to the Board, we reflected the
fundamental principle that the Board should develop labor policy,
by observing that First National Maintenance Corp. "seemingly left
open" the issue of whether layoffs prompted by modernization are
mandatory subjects of bargaining. Pan Am. Grain Co., 432 F.3d at
74.

                                   -9-
526, 530, 534-36 (1994), enforced mem., 74 F.3d 1227 (3d Cir. 1995)

(holding that the employer must bargain over a layoff decision

motivated both by a business downturn and business decisions

including the installation of new technology); see also FiveCAP,

Inc., 332 N.L.R.B. 943, 955 (2000).   Pan American concedes that it

cannot demonstrate that any particular layoff arose solely due to

its modernization program,6 and we note that there is substantial

evidence, including the testimony of company president Gonzalez,

supporting the Board's finding that the layoffs were motivated in

part by the costs associated with the strike.   Because labor costs

were a motivating factor for the layoffs, the Board explained that

the company had a duty to bargain with the Union over the layoffs.

Acknowledging the clarity with which the Board responded to our

remand, we find its position reasonably defensible and affirm.

          Pan American argues that the Board "deviat[ed] from an

established standard" and should have applied a modified form of

the burden-shifting test announced in Dubuque Packing Co., 303

N.L.R.B. 386 (1991), enforced sub nom. U.F.C.W. Local 150-A v.

N.L.R.B., 1 F.3d 24 (D.C. Cir. 1993), which was introduced to

determine whether a plant relocation is a mandatory subject of

     6
       In its brief, Pan American "recognize[s] that the February
27 layoff decision was based on a combination of factors," Brief of
Petitioner at 26, and "acknowledges that the 'economic reasons'
were a different consideration that caused the layoff in February
2002, . . . in addition to a chief factor, the automation project,"
id. at 30.

                               -10-
bargaining.7    This contention is untimely as Pan American did not

present it to the Board on remand.         See 29 U.S.C. § 160(e) ("No

objection that has not been urged before the Board . . . shall be

considered by the court.").        Moreover, the Board has explicitly

limited Dubuque to relocation decisions, see, e.g., Furniture

Renters of Am., Inc. v. N.L.R.B., 36 F.3d 1240, 1246-47 (3d Cir.

1994),   and   Pan   American   belies   its   assertion   that   the   Board

deviated from "an established standard" when it suggests that the

Board should have applied a modified form of a test developed for

a different set of facts.

           We remanded the Board's order because "we [did] not

understand [its] rationale" and therefore could not "effectively

review it."    Pan Am. Grain Co., 432 F.3d at 74 (citation omitted).

In its supplemental decision and order, the Board apprises us of

the analysis it employs when layoffs are motivated by several

reasons, one of which is labor costs, a mandatory subject of

bargaining.    Its philosophical approach is not unlike the one it

has adopted for discrimination claims where the employer contends

that a legitimate business decision, rather than antiunion animus,

explains the adverse action taken against the employee. See, e.g.,

     7
       The Dubuque test places an initial burden on the union to
establish a prima facie case for mandatory bargaining by showing
that the relocation did not include a change of operations. 303
N.L.R.B. at 391. The employer then can rebut by showing that labor
costs were not a factor in the relocation or that even if such
costs were a factor, the union could not have offered concessions
that could change the employer's decision to relocate. Id.

                                   -11-
Wright Line, 251 N.L.R.B. 1083 (1980), enforced, 662 F.2d 899 (1st

Cir. 1981); see also N.L.R.B. v. Transp. Mgmt. Corp., 462 U.S. 393,

403 (1983) (holding that the employer bears the burden of negating

causation in a mixed-motive discrimination case, noting "[i]t is

fair that [the employer] bear the risk that the influence of legal

and   illegal   motives    cannot     be    separated.").      Mindful   of   our

deferential standard of review, we are content with the Board's

explanation     of   the   analysis    employed,     finding    it   reasonably

defensible.

           We turn finally to Pan American's assertion that the

Board's remedial order is inappropriate.             The company objects to

the remedy based on its view that the layoff was a non-bargainable

business decision,8 a stance we have rejected.                 We defer to the

Board's knowledge and expertise in fashioning remedies unless the

order patently disregards the policies of the Act. Teamsters Local

Union No. 171 v. N.L.R.B., 863 F.2d 946, 268 (D.C. Cir. 1988).                The

customary remedy for an employer's violation of Section 8(a)(5),

reinstatement and full backpay, is "presumptively valid;" it aims

to return the employee to the economic status quo before the

employer's unilateral action.              Regal Cinemas, Inc., 317 F.3d at

      8
        It requests a remedy similar to the one issued in
Transmarine Navigation Corp., 170 N.L.R.B. at 389-90, a case in
which the Ninth Circuit reversed the Board, finding that the
employer was not required to bargain over the layoff decision. In
contrast, we have affirmed the Board's holding that Pan American
violated Sections 8(a)(5) and (1) of the Act.

                                      -12-
315; Geiger Ready-Mix Co. v. N.L.R.B., 87 F.3d 1363, 1371 (D.C.

Cir. 1996).   See, e.g., Winchell Co., 315 N.L.R.B. at 536; Compu-

Net Commc'n, Inc., 315 N.L.R.B. 216, 225-26 (1994).   We cannot say

that the Board's choice of a conventional remedy for Pan American's

unilateral discharge patently disregards the purposes of the Act.

          We consider seriously, however, Pan American's argument

that reinstatement constitutes an undue burden on the company,

noting that it has never increased its workforce since the February

2002 layoffs.   "[R]einstatement is an inappropriate remedy if it

would be 'unduly economically burdensome' for the employer." Regal

Cinemas, Inc., 317 F.3d at 315 (quoting Teamsters Local Union No.

171, 863 F.2d at 957-58).   The employer bears the burden of showing

"that the Board's [remedial] order would require a substantial

outlay of new capital or otherwise cause undue financial hardship."

Teamsters Local Union No. 171, 863 F.2d at 958.    While we enforce

the Board's remedial order, we draw attention to its assurances

both in its brief, Brief of Respondent at 31, n.17, and at oral

argument that Pan American can provide evidence during the Board's

compliance proceedings to show that reinstatement of the fifteen

employees is unduly burdensome because the company no longer

requires those positions for its operation. See Compu-Net Commc'n,

Inc., 315 N.L.R.B. at 216, n.3 ("[T]he Respondents may introduce

previously unavailable evidence, if any, at the compliance stage of

this proceeding to demonstrate that the reinstitution of those

                                -13-
operations is unduly burdensome.") (citing Lear Siegler, Inc., 295

N.L.R.B. 857 (1989)); E.I. Du Pont Nemours & Co. v. N.L.R.B., 489

F.3d 1310, 1317 (D.C. Cir. 2007) (discussing the appropriate

procedure for developing an objection to the remedial order); West

Penn Power Co. v. N.L.R.B., 394 F.3d 233, 246 (4th Cir. 2005)

(same).

                              III.

          For the foregoing reasons, Pan American's petition for

review is denied and the Board's cross-application for enforcement

is granted.

          So ordered.

                              -14-