Court Opinion

ID: 8994201
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:28:00.175322+00
Date Added: 2024-06-11T17:11:00.382275
License: Public Domain

EASTERBROOK, Circuit Judge,
with whom POSNER, COFFEY, MANION and KANNE, Circuit Judges, join, concurring in part and dissenting in part.
Substantial evidence supports the Board’s conclusion that U.S. Marine did what it thought expedient to evade its obligation to bargain collectively with its workers. A remedy is in order.
Again, with emphasis: a remedy is in order. Unlike other agencies that may impose fines and penalties to deter misconduct, the Labor Board is confined to make-whole relief. It may put the workers in the. position they would have occupied had there been no violation, and it may restrain future violations. Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 900-01, 104 S.Ct. 2803, 2813-14, 81 L.Ed.2d 732 (1984); NLRB v. Strong, 393 U.S. 357, 359, 89 S.Ct. 541, 543, 21 L.Ed.2d 546 (1969); Phelps Dodge Corp. v. NLRB, 313 U.S. *1328177, 194-98, 61 S.Ct. 845, 852-54, 85 L.Ed. 1271 (1941); Republic Steel Corp. v. NLRB, 311 U.S. 7, 10-12, 61 S.Ct. 77, 78-79, 85 L.Ed. 6 (1940); Consolidated Edison Co. v. NLRB, 305 U.S. 197, 235-36, 59 S.Ct. 206, 219-20, 83 L.Ed. 126 (1938). See also § 10(c) of the National Labor Relations Act, 29 U.S.C. § 160(c). Any excess is a penalty.
Perhaps the agency should have the power to penalize, but it does not. What the Board characterizes as a “forfeiture” of the successor employer’s privilege to set its own terms and conditions of employment is a penalty by another name — and not a much different name at that. I therefore disagree with Part II.D of the court’s opinion, which requires U.S. Marine to apply to its entire workforce in 1991 the terms and conditions that Chrysler was using when it closed in 1983, and to provide back pay based on these 1983 terms. I join the remainder of the opinion.
Step one in resolving the question whether the Board’s order is a remedy is determining what would have happened if U.S. Marine had respected its obligations under the law. Perhaps U.S. Marine was obliged to afford its workers the benefit of the Chrysler contract, on the theory that when a successor is likely to hire most of the predecessor’s workers, it must use the predecessor’s terms until the union consents to the change or the parties reach impasse after lengthy good-faith bargaining. Cf. Litton Financial Printing v. NLRB, — U.S. —, 111 S.Ct. 2215, 2221-23, 115 L.Ed.2d 177 (1991). Although our panel so held, today no member of this court endorses that belief. The language and rationale of NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), like the Court’s other successorship cases, create only a bargaining obligation even if the successor plans to (and does) hire all of its predecessor’s employees.
A bona fide sale of the business enables the successor to start with its own terms. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 40, 107 S.Ct. 2225, 2234, 96 L.Ed.2d 22 (1987); Burns, 406 U.S. at 284-91, 92 S.Ct. at 1580-84. Change may be the only alternative to consigning the plant to the scrap heap. Burns, 406 U.S. at 287-88, 92 S.Ct. at 1582-83. Denying the successor the right to establish its own wages and other terms whenever it is likely to hire substantially all of the predecessor’s workers could prevent this process from occurring and lead to liquidation rather than revivification. Paradoxically it also would discourage successors from making generous offers to labor. If the buyer offers an attractive package of wages and other terms and conditions of employment, many of the old employees will want to cross over; the NLRA forbids discrimination against them; once they cross over the employer would be forced to restore the old package in toto— even if it makes the transaction uneconomic. If the buyer offers a package that is unattractive to the old work force, it avoids any risk of being forced to up the ante, but it also may have trouble hiring workers with the skills needed to run the business.
The Board implies that when the new employer wants to change the work rules but is willing to offer high wages, it can’t do so (because too many of the old employees will apply), while if the work rules are OK and the new employer wants to drop the wages, it may do this because it will believe that it has made the job unattractive to the old workers. Neither labor law nor the economics of restoring failing businesses to health supports or allows such a distinction — especially not when the only way to know whether the predecessor’s workers are likely to transfer their loyalties is to see whether they do.
The Second, Fourth, Ninth, and District of Columbia Circuits have held that successors may set their own terms and conditions whether or not the firm expects its predecessor’s employees to cross over en masse. Saks & Co. v. NLRB, 634 F.2d 681, 687-88 (2d Cir.1980); Nazareth Regional High School v. NLRB, 549 F.2d 873, 881-82 (2d Cir.1977); NLRB v. Spruce Up Corp., 529 F.2d 516 (4th Cir.1975), enforcing 209 N.L.R.B. 194 (1974); Kallmann v. NLRB, 640 F.2d 1094, 1102-03 (9th Cir.1981); NLRB v. Dent, 534 F.2d 844, 847 *1329(9th Cir.1976); International Association of Machinists v. NLRB, 595 F.2d 664, 672-76 (D.C.Cir.1978). These courts conclude that the remark in Burns, 406 U.S. at 294-95, 92 S.Ct. at 1585-86, that “there will be instances in which it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees’ bargaining representative before he fixes terms” does not'prevent the successor from setting initial terms. The Court said that a successor may be required to consult with the union; an obligation to “consult” does not imply an obligation to use the old terms unless the union agrees to different ones. The workers have a self-help response if the successor’s package is unacceptable: they may decide, individually or collectively (recall that they are already organized), not to work unless the successor sweetens the pot.
Elsewhere in Burns the Court wrote: “It does not follow ... from [the successor’s] duty to bargain that it was bound to observe the substantive terms of the collective-bargaining agreement the union had negotiated with [the predecessor] and to which [the successor] in no way agreed.” 406 U.S. at 281-82, 92 S.Ct. at 1579. Part III of Bums, id. at 281-91, 92 S.Ct. at 1579-84, rejects the Board’s position that the successor is substantively bound — a position that the Board wants to revive under the guise of “remedy”. Part IV of the opinion, id. at 292-96, 92 S.Ct. at 1584-86, in which the “perfectly clear” sentence appears, is about bargaining rather than substance. To emphasize this, the Court noted: “It is difficult to understand how [the successor] could be said to have changed unilaterally any pre-existing term or condition of employment without bargaining when it had no previous relationship whatsoever to the bargaining unit and, prior to [taking over], no outstanding terms and conditions of employment from which a change could be inferred.” Id. at 294, 92 S.Ct. at 1585 (emphasis in original). The Board ignores that observation — plus Part III of Burns, and all of Fall River — in favor of a tunnel-vision reading of the “perfectly clear” sentence.
A conclusion that the pertinent obligation is to consult with the union sets up the critical question: how can it be remedial to require the successor to use the old terms? My colleagues observe that U.S. Marine’s “unlawful conduct created ... uncertainty concerning whether substantially all of the former Chrysler employees would have been hired.” 944 F.2d at 1321. I agree with the court that the Board could resolve against U.S. Marine all factual ambiguities created by its illegal conduct. Let us take it as established that, but for its unfair labor practices, U.S. Marine would have hired substantially all of Chrysler’s workers. How does this support the Board’s order? U.S. Marine would have been free to use its own terms even if it had shouted from the rooftops that it planned to hire every Chrysler employee who applied. Uncertainty about the number of workers to be hired cannot matter when even perfect knowledge would not support the Board’s directive.
If, as four other courts of appeals hold, U.S. Marine was entitled to implement new terms when it took over, no matter how many of Chrysler’s workers it expected to hire, then these terms establish the benchmark that the Board is entitled to restore. Had U.S. Marine followed the NLRA to a T, all would have labored on U.S. Marine’s terms, not Chrysler’s. Subsequent unfair labor practices were designed only to avert the need to bargain with the union. How could it be said that unfair labor practices designed to stymie bargaining require the successor to use particular terms? The Board’s rationale is:
The Love’s Barbeque remedy that we order here does not require a specific complaint allegation that the Respondents made unlawful unilateral changes when they began their operations. Nor must this remedy rest on a separate finding that the Respondents committed a separate unfair labor practice by unilaterally changing employment terms. The illegality of such changes is subsumed in the broader 8(a)(5) and (3) allegations and violations involved in this case. As noted *1330above, an employer — like the Respondents — that unlawfully discriminates in its hiring in order to evade its obligations as a successor does not have the Burns right to set initial terms of employment without first consulting the Union. The Respondents forfeited any right they may have had as a successor to impose initial terms when they embarked on their deliberate scheme to avoid bargaining with the Union by their discriminatory hiring practices.
293 N.L.R.B. No. 81 at 10. Whatever else one might say about this passage, it fails to explain — fails to attempt to explain — why the “Love’s Barbeque remedy” is a remedy rather than a penalty. The telling term “forfeited” gives away the game. (A “Love’s Barbeque remedy”, after Love’s Barbeque Restaurant, 245 N.L.R.B. 78 (1979), enforcement denied in relevant part under the name Kallmann v. NLRB, 640 F.2d 1094, 1102-03 (9th Cir.1981), is the Board’s argot for an order to use a predecessor’s wages, terms, and conditions of employment and extend back pay accordingly.)
What are the “obligations as a successor” that U.S. Marine “evade[d]”? Much of the Board’s discussion preceding the passage I have quoted assumes that U.S. Marine had to start off with Chrysler’s terms if it expected most of Chrysler’s employees to want to work for it, using these terms until the union agreed to others or good faith bargaining ended in impasse. Such an obligation would make the Board’s order a remedy (for the union has never agreed to changes), but there is no such obligation.
One genuine obligation is to act without discrimination in evaluating those of the predecessor’s employees who offer to work. The Board found that U.S. Marine discriminated against 34 of the 257 applicants. The remedy for this sin is to hire the 34; it is not remedial to augment the offer to the other workers or to give these 34 terms better than they would have had if U.S. Marine had hired them in 1984. Had U.S. Marine hired these 34 (rather, had it evaluated their applications without discrimination), the terms afforded all workers still would have been those U.S. Marine set, not those Chrysler set.
The second “obligation[ ] as a successor” that U.S. Marine evaded is to bargain once it expects a majority of its workers to come from Chrysler’s employees. See Fall River, 482 U.S. at 46-52, 107 S.Ct. at 2237-41. The remedy for this evasion is a bargaining order. If the Board were to find that, had U.S. Marine bargained in good faith as the Act requires, it would have agreed to the terms of the Chrysler contract, then it might be possible to say that the Board’s order imposing those terms on U.S. Marine is a remedy. The Board made no such finding — understandably. The opportunity to change the antiquated work rules at this outboard motor plant was one of the things creating a prospect for turning this losing venture around. In May 1984, less than five months after U.S. Marine took over, the district court issued a § 10(j) injunction requiring U.S. Marine to bargain with the union. Squillacote v. U.S. Marine Corp., 116 L.R.R.M. 2663 (E.D.Wis.1984); see also Szabo v. U.S. Marine Corp., 819 F.2d 714, 718-21 (7th Cir.1987). Seven years of bargaining have not led to restoration of Chrysler’s terms. It is unimaginable that U.S. Marine would have agreed to use those terms had the bargaining begun in January 1984 (when it should have) rather than May 1984 (when it did). The Board’s rationale is unrelated to the anticipated (or actual) outcome of bargaining; instead the Board found that by deeds after reopening the plant U.S. Marine retroactively “forfeited” the entitlement to set its own terms. That is the language of penalty; its order is the fact of penalty.
Counsel for the Board offered another rationale: if U.S. Marine had known all along that it would be required to bargain with the union, it might not have taken over the plant. Had U.S. Marine kept out of the picture, the workers would have retained the benefits of their collective bargaining agreement with Chrysler. Counsel suggested alternatively that U.S. Marine might have adopted Chrysler’s terms to hold down friction with the union. Now the Board said no such things, so counsel’s *1331rationalization presents a Chenery problem. Let that pass. No such findings could be sustained. If U.S. Marine (or some equivalent buyer) had not appeared, Chrysler would have closed the plant; the workers would have received unemployment compensation, not the wages and terms of the Chrysler contract. U.S. Marine was willing to come in only if it could make the changes it believed were essential to turn this plant around.
Our court endorses none of the Board’s approaches (which makes my colleagues’ refrain about deference to the Board puzzling, see Sure-Tan, 467 U.S. at 899-900 & n. 9, 104 S.Ct. at 2812-13 & n. 9). Instead the majority rings changes on the theme that it is hard to know how many of Chrysler’s workers would have been hired had U.S. Marine behaved itself. This approach is our court’s invention. As the successor need not use the predecessor’s terms just because it expects to hire substantially all of the predecessor’s workers, the uncertainty has no legal significance. Yet the majority is unwilling to hold that labor law creates such a substantive obligation. The Board’s rationales are defective; the majority’s substitute is mysterious.
Labor law commands us to patrol the border between remedy and penalty. Perhaps that indistinct line is not worth drawing. Lack of authority to penalize, and thus to deter, means that there will be too many violations. Agencies, sensing the need to pack a wallop, strain against the limits of their powers and create de facto penalties. Needing to make a penalty look like a remedy, the Board prescribes back pay and restoration of terms — in other circumstances remedial, but here exceeding the sanction that would be appropriate if the Board had the power to impose explicit fines. Chrysler’s workers received generous severance packages on the premise that U.S. Marine was not a mere continuation of the old business. Allied Industrial Workers Local 879 v. Chrysler Marine Corp., 819 F.2d 786 (7th Cir.1987). They have received wages from U.S. Marine to compensate them for the elimination of the antique manning tables and work rules. Now they receive a third salve, in back pay, for the loss of the work rules they enjoyed when Chrysler ran the plant, and U.S. Marine must use those rules from now on. None of this is remedial, and as a penalty it is not only too high but also interferes with the future operation of the plant. How much cleaner if the Board could levy a hefty fine, distribute the money to the workers, and be done. Instead the Board’s pretense of “remedy” has produced an order that may make profitable production impossible. By approving this masquerade we preserve featherbedding, increase the risks of taking over foundering firms, and frustrate the revival of aging plants. Neither American workers nor American consumers will welcome this consequence.