EFCO Corporation v. NLRB ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
EFCO CORPORATION; EMPLOYEE
POLICY REVIEW COMMITTEE;
EMPLOYEE BENEFIT COMMITTEE;
EMPLOYEE SAFETY COMMITTEE,
Petitioners,
No. 99-1147
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent.
LPA, INCORPORATED,
Amicus Curiae.
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
EFCO CORPORATION; EMPLOYEE
POLICY REVIEW COMMITTEE;
No. 99-1277
EMPLOYEE BENEFIT COMMITTEE;
EMPLOYEE SAFETY COMMITTEE,
Respondents.
LPA, INCORPORATED
Amicus Curiae.
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board.
(17-CA-6911)
Argued: February 28, 2000
Decided: May 17, 2000
Before LUTTIG and TRAXLER, Circuit Judges, and
G. Ross ANDERSON, Jr., United States District Judge
for the District of South Carolina,
sitting by designation.
_________________________________________________________________
Petition for review denied and cross-application for enforcement
granted by unpublished per curiam decision.
_________________________________________________________________
COUNSEL
ARGUED: Ransom Asbury Ellis, Jr., ELLIS, ELLIS, HAMMONS
& JOHNSON, P.C., Springfield, Missouri, for EFCO, et al. Meredith
L. Jason, NATIONAL LABOR RELATIONS BOARD, Washington,
D.C., for Board. ON BRIEF: Ransom A. Ellis, III, Lester J. Boyle
3d, ELLIS, ELLIS, HAMMONS & JOHNSON, P.C., Springfield,
Missouri; Michelle Voss, SCHMIDT, KIRBY & SULLIVAN, P.C.,
Springfield, Missouri, for EFCO, et al. Frederick L. Feinstein, Gen-
eral Counsel, Linda Sher, Associate General Counsel, Aileen A. Arm-
strong, Deputy Associate General Counsel, Peter Winkler,
Supervisory Attorney, NATIONAL LABOR RELATIONS BOARD,
Washington, D.C., for Board. Daniel V. Yager, MCGUINESS &
WILLIAMS, Washington, D.C., for Amicus Curiae.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
EFCO Corporation (EFCO) and three employee committees seek
review of the National Labor Relations Board's determination that the
employee committees are labor organizations under section 2(5) of
2
the National Labor Relations Act (NLRA) and that EFCO dominated,
interfered with, and supported the committees in violation of section
8(a)(2) and (1) of the NLRA.1 EFCO does not, however, challenge the
decision that it is guilty of other independent section 8(a)(1) viola-
tions of the NLRA. The Board cross-petitions for enforcement of the
order. Because we find substantial evidence in the record to support
the Board's determination, we deny the petition for review and grant
enforcement of the Board's order.
I.
EFCO is a Missouri corporation which manufactures aluminum
framed window units, curtain wall systems, storefront systems, entry
door systems, and automatic doors for installation in hospitals,
schools, high-rise apartments, and office buildings. EFCO is incorpo-
rated in Missouri and prior to 1996 operated facilities in California,
Illinois, Missouri, and Oklahoma. In 1996, EFCO expanded its busi-
ness by opening production facilities in South Carolina and Virginia.
Currently, EFCO employs approximately 1,250 employees in these
facilities.
During the 1980s, EFCO vested principal responsibility for formu-
lating company policy with the Management Committee, composed
of company president, Chris Fuldner, and its vice presidents, where
Fuldner had final authority over all decisions. After EFCO's experi-
ence with the United Brotherhood of Carpenters and Joiners of Amer-
ica during the 1960s and 1970s, Fuldner established programs for
EFCO employees that he hoped would improve the company's pro-
_________________________________________________________________
1 Subject matter jurisdiction is proper in this circuit pursuant to 28
U.S.C.A. § 1331 (West 1993) since this appeal involves a federal ques-
tion arising under section 10(f) of the NLRA, which provides that
[a]ny person aggrieved by a final order of the Board granting or
denying in whole or in part the relief sought may obtain a review
of such order in any court of appeals of the United States . . .
wherein such person resides or transacts business . . . by filing
in such court a written petition praying that the order of the
Board be modified or set aside.
29 U.S.C.A. § 160(f) (West 1998).
3
ductivity and his relationship with employees. Fuldner first estab-
lished an employee profit-sharing plan and Employee Stock
Ownership Plan. Once Fuldner discovered these programs did not
fully accomplish his goals, he implemented a program called Manage-
ment Resources Planning II (MRP II), which sought higher levels of
efficiency through improvements in quality and inventory control, use
of a "just-in-time" production system, and greater employee participa-
tion.
As part of the MRP II program, EFCO wanted employees to
become more self-directed in solving day-to-day problems and more
involved in company decision-making. EFCO believed the creation of
employee committees would help achieve this goal. Based on this
belief, during 1992 and 1993, EFCO created four committees: the
Employee Safety Committee, the Employee Benefit Committee, the
Employee Policy Review Committee, and the Employee Suggestion
Screening Committee. The committees met on company premises
during work hours and EFCO paid employee members for time spent
on committee activities. EFCO provided materials and office supplies
for the committee members' use. EFCO management charged these
committees with various responsibilities; however, ultimate authority
over benefit and policy decisions remained with EFCO management.
A. Employee Safety Committee
On April 21, 1992, company Vice President Scott Beckwith
instructed Mike Washick, Plant Facilitator and Plant Safety Director,
to distribute a memorandum to all employees announcing the forma-
tion of a workplace safety committee comprised of employees from
the shop floor and offices. The memorandum stated that the
Employee Safety Committee would be responsible for handling safety
problems and establishing policies and finding ways to enforce them.
The memorandum solicited volunteers for the committee but stated
that EFCO did not want more than one committee member from any
one department.
Washick selected the initial eleven members of the committee and
organized the meeting schedule, occasionally raised topics for discus-
sion, and presented proposals from the Employee Safety Committee
to the Management Committee. Lora Saffer replaced Washick on the
4
Employee Safety Committee in August 1993 and assumed his role
and responsibilities in organizing the committee meetings. On
December 2, 1993, the Employee Safety Committee elected a coordi-
nator that assumed Washick's and Saffer's duties on the committee.
B. Employee Benefit Committee
On September 8, 1992, Fuldner notified EFCO employees that he
would create an Employee Benefit Committee for the purpose of
helping "make EFCO's employee benefit plans more effective in
meeting the needs of employees." J.A. 678. He wrote: "The commit-
tee will gather comments and ideas from employees about our benefit
plans, contact others outside of EFCO, and make specific recommen-
dations to EFCO's management committee." Id . The Employee Bene-
fit Committee presented several proposals to the Management
Committee, some of which were adopted, involving a long-term dis-
ability plan, medical and dental plans, an employee party, and a
"Jeans Day" proposal.
EFCO Chief Financial Officer Bret Baker selected the initial com-
mittee members, including Human Resources Manager Mona
Workes, and prepared an agenda for the first meeting. Until his depar-
ture in the spring of 1993, Baker attended the meetings, organized an
agenda for the committee, and led discussions on various issues,
including medical, dental, and disability plans and profit sharing.
Workes also attended meetings and led discussions on various issues.
In June 1993, EFCO Comptroller Don Kellhofer began attending
meetings and acted as a liaison between the committee and Fuldner.
C. Employee Policy Review Committee
On January 15, 1993, Workes circulated a memorandum to all
EFCO employees announcing the formation of the Employee Policy
Review Committee. The memorandum stated, in part:"We are estab-
lishing an Employee Policy Committee to help us review and estab-
lish company policies. The committee will gather comments and ideas
from employees regarding existing policies, or needs for implementa-
tion of new policies and make specific recommendations to EFCO's
management committee." J.A. 577. Baker selected members for the
committee, including one company supervisor. Fuldner spoke with
5
the committee at the first meeting, asked members to draft a no-
smoking policy, and provided direction for a mission statement that
the committee was responsible for writing. The committee worked on
proposals concerning a four-day work week, job transfers, vacation
time, dress code, and holidays. Baker and Workes attended some
meetings and often raised issues for discussion.
D. Employee Suggestion Screening Committee
On December 28, 1992, EFCO distributed a memorandum
announcing the creation of the Employee Suggestion Screening Com-
mittee. The committee administered an employee suggestion program
that encouraged participation through some special recognition by the
Management Committee and payment of five dollars to employees
with valid suggestions for up to a maximum of five suggestions.
Employee Suggestion Screening Committee members filtered out
frivolous suggestions and forwarded valid suggestions to the appro-
priate management group. At the first meeting, attended by a senior
vice president and the chief financial officer, EFCO managers set the
agenda for the meeting and the committee members elected Mark
Kaisar as chairman.2 Two Management Committee members would
attend each committee meeting as advisors and ensure that the com-
mittee received necessary resources.
E.
Acting on a charge filed by the United Brotherhood of Carpenters
and Joiners of America, the Regional Director of the Seventeenth
Region of the National Labor Relations Board issued a complaint on
December 15, 1993, alleging that EFCO violated certain provisions
of the NLRA. After a hearing before Administrative Law Judge
George F. McInerny, he found that all four committees were labor
organizations and that EFCO unlawfully dominated or interfered with
each of them.
On December 31, 1998, the Board affirmed the ALJ's rulings, find-
ings, and conclusions with minor modifications. The Board's decision
_________________________________________________________________
2 After Kaisar subsequently became a statutory supervisor, he remained
chairman of the committee.
6
found that EFCO violated section 8(a)(2) and (1) of the NLRA, 29
U.S.C.A. §§ 158(a)(2), (1) (West 1998), by establishing, dominating,
interfering with, and supporting certain employee committees. The
Board further found that EFCO violated section 8(a)(1) of the NLRA
by engaging in other independent unfair labor practices. 29 U.S.C.A.
§ 158(a)(1). The Board directed EFCO to dissolve the employee com-
mittees, except the Employee Suggestion Screening Committee, to
cease and desist from engaging in other independent unfair labor
practices, and to post notices concerning the same.
II.
Before we can address the issues before us, we first must determine
the standard of review applicable to the Board's decision and order.
EFCO believes we should apply traditional deference standards, but
the Board argues the more stringent Chevron standard applies. See
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984).
Contrary to the Board's assertion in its brief,"the applicability of
Chevron in this context is by no means clear." Bob Evans Farms, Inc.
v. NLRB, 163 F.3d 1012, 1016 (7th Cir. 1998). Chevron governs a
court's review of an agency's construction of a statute which the
agency administers. Under Chevron, a court must first ask whether
Congress has spoken directly to the precise question at issue because
the "unambiguously expressed intent of Congress" is controlling.
Chevron, 467 U.S. at 842-43. However, "if the statute is silent or
ambiguous with respect to the specific issue, the question for the court
is whether the agency's answer is based on a permissible construction
of the statute." Id. at 843. The reviewing court may not substitute its
own construction for a reasonable interpretation on the part of the
agency. Id. at 844. Therefore, a court must defer to an agency's per-
missible construction of statutory terms where it acts within the rule-
making or policy-formation discretion that Congress intended the
agency to use in filling gaps left in a statute. Id. at 843-44.
The Board possesses both rulemaking and adjudicatory powers, see
29 U.S.C.A. §§ 156, 160 (West 1998), but"uniquely among major
federal administrative agencies has chosen to promulgate virtually all
of the legal rules in its field through adjudication rather than rulemak-
7
ing." Allentown Mack Sales & Serv., Inc. v. NLRB, 522 U.S. 359, 374
(1998). Since the Board develops general rules in the course of adju-
dication, there will invariably be occasions when a special degree of
deference is appropriate. See Holly Farms Corp. v. NLRB, 517 U.S.
392, 398-99 (1996). Therefore, the issue we presently face is whether
or not the Board adopted what amounts to a "rule" in its decision.
Section 8(a)(2) of the NLRA makes it an unfair labor practice for
an employer "to dominate or interfere with the formation or adminis-
tration of any labor organization or contribute financial or other sup-
port to it." 29 U.S.C.A. § 158(a)(2). The Board found that three of the
employee committees were labor organizations and that EFCO inter-
fered with them. A determination that the committees were labor
organizations and the employer interfered with them cannot be said
to involve policy choices or rulemaking in the legislative sense. In
reaching this conclusion, "the Board was engaged in the classic judi-
cial exercise of resolving competing claims under the statute, a func-
tion which does not implicate the Supreme Court's central concerns
in Chevron." Bob Evans Farms, 163 F.3d at 1020. Therefore, we
believe it is appropriate for us to apply traditional deference standards
in reviewing the Board's decision and not the Chevron standard.
The Board's findings of fact or findings on mixed questions of law
and fact are conclusive if they are "supported by substantial evidence
on the record considered as a whole." 29 U.S.C.A.§ 160(e), (f); see
Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951); Pirelli
Cable Corp. v. NLRB, 141 F.3d 503, 514 (4th Cir. 1998). "Substantial
evidence is ``such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.'" Pirelli, 141 F.3d at 514 (quot-
ing Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
"Put differently, we must decide whether on this record it would have
been possible for a reasonable jury to reach the Board's conclusion."
Allentown Mack Sales & Serv., 522 U.S. at 366-67.
The Board's legal conclusions are reviewed to determine whether
they have a reasonable basis in the law. Therefore, they will be upheld
unless they are irrational or inconsistent with the National Labor
Relations Act. See Beverly Enters., Virginia, Inc. v. NLRB, 165 F.3d
290, 296 (4th Cir. 1999) (citing NLRB v. Health Care & Retirement
8
Corp., 511 U.S. 571, 576 (1994)). "It is the function of the courts
. . . to say what an enacted statute means." Health Care & Retirement
Corp., 511 U.S. at 582.
III.
A two-step inquiry is required to determine whether an employer
has violated section 8(a)(2) and (1) of the NLRA by dominating,
interfering with, or supporting an employee committee. See Electro-
mation, Inc. v. NLRB, 35 F.3d 1148, 1157-58 (7th Cir. 1994); cf.
NLRB v. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d 1262, 1268 (4th
Cir. 1994) (recognizing that the court must find an employee group
is a labor organization before it can find a violation of section
8(a)(2)). The first step involves examining whether the committee is
a "labor organization" as defined in section 2(5) of the NLRA. 29
U.S.C.A. 152(5) (West 1998). If not, the allegation is dismissed. If the
committee meets the criteria in section 2(5), the second inquiry is
whether the employer has "dominated, influenced, or interfered with
the formation or administration of the [committee] or contributed
financial or other support to it, in violation of . . . the Act." See Elec-
tromation, 35 F.3d at 1158.
A.
Section 2(5) of the NLRA defines a "labor organization" as: "[A]ny
organization of any kind, or any agency or employee representation
committee or plan, in which employees participate and which exists
for the purpose, in whole or in part, of dealing with employers con-
cerning grievances, labor disputes, wages, rates of pay, hours of
employment, or conditions of work." 29 U.S.C.A.§ 152(5). EFCO
concedes that employees participated in the committees and the com-
mittees addressed subjects related to "working conditions," but does
not believe it was "dealing with" the committees.
The Supreme Court has found that employee committees handling
grievances, making proposals and requests concerning work condi-
tions, and discussing proposals with management, are labor organiza-
tions. See NLRB v. Cabot Carbon Co., 360 U.S. 203, 210-14 (1959).
In Cabot Carbon Co., the Court found that an organization may sat-
isfy the statutory requirement that it exists for the purpose in whole
9
or in part of dealing with employers even if it has not engaged in
actual bargaining or included a bargaining agreement. See id. at 212-
13. The concept relates to conduct much broader than collective bar-
gaining. See id. at 211.
In Peninsula, we adopted and applied the Board's definition of
"dealing with." See 36 F.3d at 1271. We recognized that "``dealing
with' must be viewed as meaning a ``bilateral mechanism involving
proposals from the employee committee concerning the subjects listed
in Sec[tion] 2(5), coupled with real or apparent consideration of those
proposals by management.'" Id. (quoting Electromation, Inc., 309
N.L.R.B. 990, 995 n.21 (1992)). We noted that the Board further
explained its definition by stating:
"That ``bilateral mechanism' ordinarily entails a pattern or
practice in which a group of employees, over time, makes
proposals to management, management responds to these
proposals by acceptance or rejection by word or deed, and
compromise is not required. If the evidence establishes such
a pattern or practice, or that the group exists for a purpose
of following such a pattern or practice, the element of deal-
ing is present. However, if there are only isolated instances
in which the group makes ad hoc proposals to management
followed by a management response of acceptance or rejec-
tion by word or deed, the element of dealing is missing."
Id. (quoting E.I. Du Pont De Nemours & Co., 311 N.L.R.B. 893, 894
(1993)). We summarized the bilateral mechanism analysis as follows:
(1) while the term "dealing with" connotes activity which is
broader than collective bargaining, an employer does not
necessarily "deal with" its employees merely by communi-
cating with them, even if the matters addressed concern
working conditions; (2) "dealing" occurs only if there is a
"pattern or practice" over time of employee proposals con-
cerning working conditions, coupled with management con-
sideration thereof; (3) isolated instances of the conduct
described in number two do not constitute "dealing;" and (4)
management may, in certain circumstances, gather informa-
tion from employees about working conditions and may
10
even act on that information without necessarily"dealing
with" them.
Id. at 1271-72. We find there is substantial evidence in the record to
support the Board's finding that a pattern or practice, and not isolated
instances, existed where the employee committees submitted propos-
als to EFCO management for consideration and they then would
reject, accept, or modify the proposals. Therefore, after a review of
the record, we find substantial evidence supports the Board's finding
that the employee committees were labor organizations.
B.
Next, we must proceed to the second step in our analysis to deter-
mine if EFCO dominated, interfered with, or supported the commit-
tees. When an employer controls the formation and structure of a
labor organization, it "dominates" that organization, thereby depriving
the employees of the complete freedom to engage in self-organization
guaranteed them by the NLRA. See NLRB v. Newport News Ship-
building & Dry Dock Co., 308 U.S. 241, 249 (1939). A labor organi-
zation that is the creation of the employer, whose structure and
function are essentially determined by the employer, and whose con-
tinued existence depends on the fiat of the employer, is one whose
formation or administration has been dominated under section 8(a)(2).
See Electromation, 35 F.3d at 1169-70. Support from the employer by
way of paying the employees for their time spent working with the
committee, providing office space for meetings, and furnishing sup-
plies for the committee's activities will not violate section 8(a)(2)
standing alone. But considering the totality of the circumstances, such
conduct can evince efforts of the employer to dominate the employee
committees. After a review of the record, we find substantial evidence
supports the Board's finding that EFCO unlawfully dominated, inter-
fered with, and supported the employee committees.
CONCLUSION
Based on our thorough review of the record as a whole and the
controlling legal principles, we conclude that there is substantial evi-
dence to support the Board's determination that the employee com-
mittees were labor organizations and that EFCO interfered with the
11
committees within the meaning of section 8(2) and (1) of the NLRA.
For the reasons stated herein, we deny the petition for review of the
Board's decision and order, and grant the Board's cross-petition for
enforcement of its order.
PETITION FOR REVIEW DENIED AND CROSS-
PETITION FOR ENFORCEMENT GRANTED
12