Grinnell Fire Protection Systems Co. v. National Labor Relations Board , 236 F.3d 187 ( 2000 )

Petition for review denied and cross-application for enforcement granted by published opinion. Judge KING wrote the opinion, in which Judge KEELEY concurred. Judge NIEMEYER wrote a concurring and dissenting opinion.

OPINION

KING, Circuit Judge:

Grinnell Fire Protection Systems Company (“Grinnell”) petitions this Court, pursuant to 29 U.S.C. § 160(f), to review the decision of the National Labor Relations Board (the “Board”) that Grinnell engaged in unfair labor practices, in violation of the National Labor Relations Act (“the Act”). The Board, by its May 28, 1999 Decision and Order (“Order”),¹ upheld the decision of its Administrative Law Judge (“ALJ”).² The Order determined that Grinnell’s implementation of its final contract offer, after failing to reach a collective bargaining agreement (“agreement”) with the representative of its employees, constituted an unfair labor practice because “there was no impasse in bargaining.”

Grinnell’s employees are represented by Local 669 (“Local 669”) of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry (collectively “the Union”). The Union also petitions for our review of the Order insofar as the Board concluded that Grinnell did not engage in unfair labor practices prior to the company’s implementation of its final contract offer. For the reasons explained below, we deny the petitions for review filed by Grinnell and the Union, and we grant the Board’s cross-application for enforcement of its Order.

I.

After its unsuccessful attempt to negotiate a new agreement with the Union, Grin-nell, on April 14,1994, declared an impasse and implemented its final contract offer. Immediately thereafter, the Union filed unfair labor practice charges against Grin-nell with the Board. Our summary of the relevant facts underlying this dispute, recounted below, is largely drawn from the ALJ’s decision of January 16,1997.

A. BACKGROUND

Grinnell, a subsidiary of Tyco International Ltd. (“Tyco”), is engaged in the design, fabrication, sale, and installation of fire sprinkler systems. For many years, Grinnell had been represented in its collective bargaining with the Union by a multiemployer bargaining group known as the National Fire Sprinkler Association (NFSA), a trade association of over 150 fire sprinkler contractors. In 1992, the Union had instituted a program known as “targeting” to assist signatory contractors, including Grinnell, in competing with lower-cost non-union contractors. Under the Union’s targeting program, the parties were sometimes able to negotiate concessionary wage rates, which permitted a NFSA member to pay lower wages or other benefits to journeyman fitters on a project-by-project basis in certain geographical areas. Jobs that included targeting of wages were referred to as “targeted” jobs. Under the program, the Union retained final authority to grant an employer’s request to target a project with a reduced rate.

From the inception of the targeting program, Grinnell, the largest fire sprinkler manufacturer and installer in the United States, had been its primary user. However, in May 1993, the Union added a new requirement to its targeting program: in order to participate in targeting after June 1, 1993, a company was obliged to commit to remain part of the NFSA multiemployer bargaining group through negotiation of the next agreement (or, in the alternative, consent to be bound by the agreement negotiated between the Union and NFSA effective April 1,1994).

Grinnell declined to accept this new condition; as a result, the Union withdrew Grinnell’s participation from the targeting program. Grinnell responded with a letter, dated September 22, 1993, in which it revoked NFSA’s bargaining authority, provided notice of termination of the existing agreement between the parties (due to expire March 31, 1994), and requested immediate negotiations with the Union for a new agreement.

B. THE NEGOTIATIONS

1. The Early Negotiations

On January 28, 1994, Grinnell provided the Union with a proposal for a new agreement, its first proposal following Grinnell’s revocation of NFSA’s bargaining authority. This proposal contained significant changes to the existing agreement in the areas of wages, job classifications, benefits, and pension plans.³

Grinnell and the Union thereafter entered into contract negotiations, with the first session being conducted on March 17, 1994, in Bethesda, Maryland. At this first session, GrinnelPs counsel, Peter Chatilo-vicz, acted as its chief negotiator. Chatilo-vicz explained Grinnell’s reasons for withdrawing bargaining authority from NFSA, and he expressed the company’s desire that, by bargaining independently with the Union, it would be able to reach an agreement that would resolve its major competitive problems. Grinnell then presented a new proposal to the Union, revised somewhat from its January 28, 1994 proposal.

Under its revised proposal of March 17, Grinnell would possess the option to apply targeting to any project where there was non-union competition. The fixed targeting rate would be tied to the journeyman wage rate in the particular state, but it would be no lower than 65% of that rate. Chatiloviez made clear to the Union that Grinnell’s goal was to control targeting, rather than leave the matter to the Union’s discretion. Grinnell also proposed replacing the existing benefits plan with one common to Tyco employees. While the parties engaged in no other significant discussions, they reached consensus that any new agreement would be for a term of three years. The Union requested an overnight recess so that it could study Grin-nell’s revised proposal.

The parties met again the next day, March 18, to discuss Grinnell’s revised proposal. During this meeting, Grinnell offered to increase the minimum targeting rate to 75% of the journeyman wage rate, up from the prior offer of 65%. The applicability of these rates would not to be subject to grievance procedures, but would be within Grinnell’s sole discretion to impose — immune from all review by the Union absent allegations that the company had misused its targeting authority. The Union did not then indicate whether it could accept Grinnell’s targeting terms, but it did present a counter wage proposal calling for incremental annual increases in the journeyman hourly rate and a $.25 increase in the differential for foremen. The parties agreed to meet again in ten days, on March 28,1994.

Shortly thereafter, an important change of circumstances occurred. On March 22, 1994, the Union issued to its members a strike notice directed at Grinnell and NFSA. Upon receiving the notice, Grinnell sought a five-day renewable extension of the existing agreement, which the Union denied. By letter dated March 24, 1994, Grinnell informed its employees that, in the event of a strike, it would hire permanent replacement workers. Ensuing controversy within the Union caused its president to place Local 669 in trusteeship, and the negotiating session scheduled for March 28,1994, was cancelled.

Effective March 28, 1994, Tommy Preuett, a former president and business manager of Local 669, was appointed as the Union’s trustee. As trustee, Preuett was empowered to manage the Union’s affairs, including the negotiation of new agreements with NFSA, Grinnell, and other independent contractors.

2. Preuett Begins to Bargain ⁴

On March 30, 1994, the first bargaining session between Grinnell and the Preuett-led Union took place in New York City.⁵ Because Preuett had not attended the earlier sessions, Grinnell reviewed its reasons for revoking NFSA’s bargaining authority and seeking improved terms in a new agreement with the Union. Grinnell also expressed concern that the Union would reach an agreement with NFSA that failed to address its problems, then expect Grin-nell to accept the terms of the NFSA agreement, or one substantially similar.

Preuett was conciliatory, stating that the Union wanted to work with Grinnell to achieve an agreement, that it did not want a strike, and that a strike was not planned for April 1, 1994. Additionally, Preuett asserted that the Union was against a uniform targeting rate because the resultant loss of flexibility would permit nonunion contractors to anticipate Grinnell’s wage expense and adjust for it. On health and welfare benefits, Preuett related that the Union was reluctant to accept the Tyco plan because it lacked portability and reciprocity, and also because Tyco did not provide health coverage for retirees. Cha-tilovicz responded that Grinnell understood the Union’s apprehension and that Grinnell was “not wedded” to the Tyco plan. However, Grinnell wanted an agreement that would nonetheless cut its costs of providing-health, welfare, and pension benefits. Preuett asked Grinnell for a thirty-day extension of the existing agreement. Grinnell refused, indicating that it wanted to finish bargaining as soon as possible.

3. The April 7, 199k Session

The next bargaining session was held on April 7, 1994, in New York City, with Preuett again representing the Union. Three separate mini-sessions actually occurred that day — in the morning, in the afternoon, and in the evening. On that same day, the Union was again conducting negotiations for a new agreement with NFSA at the same hotel.

a.

During the morning session on April 7, Preuett presented a complete proposal on behalf of the Union. This proposal called for the same wage increases included in the Union’s previous offer, and it proffered a targeting plan whereby a Union agent and a Grinnell representative in each geographical district would establish a target rate for the following year based on the local marketplace, with a mechanism to protect Grinnell from arbitrary action by Union representatives. This proposal, however, would not be accomplished until a new agreement was in effect, and it would not guarantee the targeting rates that Grinnell desired.

The Union’s proposal also provided for continued company contributions to health, welfare, and pension plans, as well as industry promotion and training funds contributions. Under the Union’s proposal, the employer’s contribution to the health and welfare fund would have been frozen at a $3.75 per-hour rate for the term of the agreement; pension contributions would have remained at the prevailing rate of $2.20 in 1994, $2.30 in 1995, and $2.40 in 1996; with a flat $.75 contribution to supplemental pension funds (“SIS”) in the states where they existed. After a break in the morning session, Grinnell made a detailed response to the Union’s proposal, continuing to insist that any agreement include a fixed targeting rate of 75%. Grinnell also wanted reduced health, welfare, and pension contributions, and it again expressed its desire to eliminate all contributions to SIS, industry promotion, and training funds.

b.

During the afternoon session on April 7, the Union proposed, a freeze on wage rates for the term of the agreement. It further proposed that, within sixty days, a committee would meet to set targeting rates for the next year and, after a review of the results, for the following year as well. The Union also proposed separate rates for industrial, commercial, and residential jobs; health and welfare contributions of $3.75, $3.50, and $3.25 per-hour over the three years of the agreement; a $.50 per-hour SIS contribution, where applicable, in the first year, with $.10 increases in each of the two succeeding years; and a reduced training fund contribution. Following an afternoon break, Grinnell again countered, reiterating its proposal that there be a fixed targeting rate of 75%, with the rate to be reviewed and possibly adjusted after a year. It offered a choice between the Tyco health plan and a $2.25 per-hour contribution to another health plan acceptable to the Union. In the pension area, Grinnell proposed to implement either its Tyco 401 (k) plan or to make a $1.20 per-hour contribution to another plan, with no SIS contributions.

c.

The parties recessed on the afternoon of April 7, reconvening that evening for a third mini-session. The Union then offered amended proposals on the hiring of apprentices, overtime, and training fund contributions, proposing a contribution of $2.20 per-hour to the pension plan, a $.50 SIS contribution for the three-year term of the agreement, and health and welfare contributions of $3.75, $3.40 and $3.40 per-hour. After an evening break, Grinnell indicated that it would agree to the Union’s overtime and training fund proposals, along with some of the language on apprentices, but stressed that targeting had to be under its control. Chatilovicz prepared a chart outlining the remaining issues, including wages/targeting, health and welfare, pension, and SIS.

4. The April 8, 1994 Session

The next bargaining session was conducted on April 8, 1994, again at the New York City hotel where Preuett and the Union were negotiating simultaneously with NFSA. On that occasion, Preuett proposed a targeting agreement under which Grinnell could lower wages on certain types of projects, but Grinnell reiterated the importance of a fixed targeting rate and stated that the 75% proposal was “final[J” Preuett responded that the Union was flexible on “economics,” but needed to retain “control of its destiny” in approving the targeting rates.

The parties also discussed the other open issues. The Union stated that its primary goal was that benefits be uniform and flexible. It indicated a desire to do further research on the proposed Tyco 401 (k) plan and decide whether it was “doable.” Preuett also stated that, while there were issues the parties did not agree on, the Union was there to achieve an agreement. The April 8 session ended with an understanding that the parties would again meet on April 12, with Grin-nell asking for specific responses from the Union on the issues of targeting, benefits, and SIS.

5. The Last Session: April 12, 199k

The bargaining session of April 12, 1994, was held at the Union’s offices in Washington, D.C.⁶ During this April 12 session, Chatilovicz told Preuett to “stop bullshitting,” accused him of “playing games,” and suggested getting a federal mediator to resolve matters. Preuett denied that he was playing games, stated that the Union wanted uniformity in the industry and had made proposals to this end, and asserted that the Union was making concessions on several issues. Chatilovicz agreed that Preuett had made some movement, but asked for the Union’s best proposal. Cha-tilovicz then averred that he recognized the Union’s desire for uniformity and that he would not be surprised if Preuett needed to have the same agreement the Union had reached with NFSA.

Preuett was accompanied to the April 12 session by Paul Green, a benefits expert. Green asked a series of questions of Grin-nell about the Tyco benefits plans. After a short while, Chatilovicz asserted that Grin-nell understood that the Union was not inclined to move away from the uniform health and welfare plan and that the Union was not interested in the Tyco plan; Cha-tilovicz also responded angrily to what he considered to be Green’s unwelcome intrusion into the negotiations. Preuett explained that the Union had concerns about the Tyco plan. When Chatilovicz asked if there were any way the Union could accept the Tyco plan, Preuett responded that he was not sure, but the Union was not yet saying “no.”

Green continued to ask questions, but Chatilovicz brushed them aside, convinced of Preuett’s disinterest in the Tyco plan. Preuett contradicted Chatilovicz’s perception, noting that the parties were bargaining. Chatilovicz responded that if the Union wanted to bargain it should “stop the bullshit.” Chatilovicz asserted that if the Union wanted to propose the benefits package from the NFSA agreement then Preuett should do so, but it was insulting to bring in Green to pick at the Tyco plan. After a discussion of the wage rates contained in the new agreement the Union had made with NFSA, Chatilovicz again asserted that he knew the Union wanted a uniform agreement. Preuett retorted that the Union did not want targeting rates determined by fixed percentages.

Following a lunch break on April 12, 1994, Grinnell presented the Union with its “final proposal” on the remaining issues. This proposal called for a freeze in wage rates for foremen at the 1994 level, a fixed targeting rate of 80% of the journeyman wage on any job with competing non-union bidders, the Tyco health plan with some modifications, the Tyco 401(k) plan with a $200 per-year service credit, up to a maximum of $1000, and no SIS contributions. Chatiloviez advised Preuett that if the Union could not accept this proposal, it should give Grinnell its best and final proposal. Preuett said the Union would consider it.

After a ninety-minute break, the Union made another counterproposal to Grinnell, resubmitting its health, welfare, and pension proposals, and offering reductions in the commercial wage rates for targeted jobs of $1 in thirty states and $1.50 in another seventeen states. Preuett maintained that this proposal would lower Grin-nell’s costs tremendously, making it more competitive, and that the Union was willing to meet indefinitely in an effort to achieve an agreement. Chatiloviez indicated that Grinnell would examine the proposal on the assumption that it was the Union’s last offer. In response, Preuett expressly asserted that this proposal was not the Union’s last offer, that the Union desired to reach an agreement, and that he was flexible. Preuett asserted that Chati-lovicz had mentioned absolute and final offers, trying to push the bargaining to an impasse. From the Union’s standpoint, however, an impasse was undesirable, and Preuett vowed not to give up easily.

Chatiloviez acknowledged that both parties had worked hard to reach an agreement but that, while the Union’s proposal provided some savings, it was not enough. Chatiloviez then informed Preuett that he would be in his office in the event the Union changed its view. Preuett asked how far apart they were and in which states Grinnell needed movement. After the parties discussed the differences in the wage rates, this bargaining session terminated.

At about 6 p.m. that evening, Preuett telephoned Chatiloviez at the latter’s office. When Preuett suggested another meeting the following day, Chatiloviez asked what the Union was going to propose. Preuett responded that he would attempt to get Grinnell to raise its rates. In response, Chatiloviez asserted that the Union had Grinnell’s final proposal and Grin-nell was not willing to change further with respect to wages and benefits. Preuett asked about bringing in a federal mediator, but Chatiloviez claimed that mediation would be futile unless the Union was willing to come down to Grinnell’s proposed rates. Preuett asked if Grinnell’s rates were “carved in stone,” and Chatiloviez assured him that they were. Preuett then said that he hoped Grinnell would change its view, and “maybe they could get together down the road.” Grinnell, 328 N.L.R.B. No. 76 at 12.

Later that evening, the Union called a nationwide strike against Grinnell. Thereafter, by letter of April 13, 1994, Grinnell informed both its employees and the Union that it was implementing its final contract offer, effective the next day, and further indicated that it would hire permanent replacements for striking employees.

C. THE BOARD PROCEEDINGS

On April 15, 1994, the Union filed unfair labor practice charges with the Board against Grinnell, alleging, among other things, that the company had failed to bargain in good faith. The Union specifically asserted that Grinnell had unlawfully implemented its final contract offer before the parties had reached a good faith impasse. The Board’s General Counsel, on receiving the Union’s charges, issued a complaint dated March 29, 1995.⁷ The allegations were that Grinnell had engaged in violations of sections 8(a)(1), (3), and (5) of the Act.⁸

The ALJ conducted a proceeding consisting of twenty-two days of hearings, commencing on October 16, 1995, and ending on March 28, 1996. The ALJ then found that “no genuine impasse[in bargaining] existed.” Grinnell, 328 N.L.R.B. No. 76 at 14. The decision of the ALJ, filed January 16, 1997, found violations against Grinnell under sections 8(a)(1) (for implying to striking workers that they would be permanently replaced), and 8(a)(5) (for implementing its final contract offer before impasse had been reached). The ALJ recommended dismissal of the section 8(a)(3) charge of unlawfully discharging striking employees, based on his conclusion that Grinnell’s April 13, 1994 letter did not constitute an effective discharge. Thereafter, on May 28, 1999, a divided Board entered the Order affirming, inter alia, the ALJ’s finding that Grinnell “violated Section 8(a)(5) and (1) of the Act by unilaterally changing terms and conditions of employment through the implementation of its final contract offer when there was no impasse in bargaining.” See Grinnell, 328 N.L.R.B. No. 76 at 1.

II.

We review the Order to determine if it is supported by substantial evidence on the record as a whole. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” NLRB v. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d 1262, 1269 (4th Cir.1994) (quoting Consolidated Edison Co. of New York v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). We have recognized that while “substantial evidence” is more than a scintilla, it may also be less than a preponderance. AT & T Wireless PCS, Inc. v. City Council of City of Virginia Beach, 155 F.3d 423, 430 (4th Cir.1998); NLRB v. Grand Canyon Mining Co., 116 F.3d 1039, 1044 (4th Cir.1997). With regard to the Board’s application of the law to the facts, a reviewing court must affirm the Board’s conclusions if they are reasonable and consistent with the Act. NLRB v. Yeshiva Univ., 444 U.S. 672, 691, 100 S.Ct. 856, 63 L.Ed.2d 115 (1980).

We accord due deference to the reasonable inferences that the Board draws from the evidence, NLRB v. Brown, 380 U.S. 278, 292, 85 S.Ct. 980, 13 L.Ed.2d 839 (1965), regardless of whether we might have reached a different conclusion in the first instance. Universal Camera, 340 U.S. at 488, 71 S.Ct. 456. Of course, courts “remain the final authorities on issues of statutory construction.” Shanty Town Assocs. Ltd. v. EPA, 843 F.2d 782, 790 (4th Cir.1988).

III.

A.

Defining the section 8(a)(5) obligation “to bargain collectively,” section 8(d) of the Act requires, among other things, that the employer and employees “meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment ... but such obligation does not compel either party to agree to a proposal or require the making of a concession.” 29 U.S.C. § 158(d). See generally NLRB v. American Nat. Ins. Co., 343 U.S. 395, 72 S.Ct. 824, 96 L.Ed. 1027 (1952). Because the duty to bargain does not impose an obligation to agree, at some point during bargaining a party may conclude that further meetings and discussions will not produce an agreement and it can declare that an impasse has been reached. If the party declaring an impasse does so in good faith, and if its conclusion is justified by objectively established facts, then the statutory duty to bargain collectively is satisfied. See Laborers Health and Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., 484 U.S. 539, 544 n. 5, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988); AMF Bowling Co., Inc. v. NLRB, 63 F.3d 1293, 1299 (4th Cir.1995).

Generally speaking, section 8(a)(5) of the Act prohibits an employer from unilaterally instituting changes regarding wages, hours, and other terms and conditions of employment before reaching a goodfaith impasse in bargaining. NLRB v. Katz, 369 U.S. 736, 747, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). An impasse exists when the collective bargaining process has been exhausted and, “despite the parties’ best efforts to reach an agreement, neither party is willing to move from its position.” Excavation-Construction, Inc., 248 N.L.R.B. 649, 650, 1980 WL 11273 (1980). A party claiming an impasse as the basis for its unilateral actions bears the burden of proving that an impasse in negotiations actually existed. Tom Ryan Distributors, Inc., 314 N.L.R.B. 600, 604, 1994 WL 395254 (1994).

Determining whether an impasse in bargaining was actually reached is obviously an inquiry that is fact-intensive. Even though the historical circumstances surrounding the various negotiations in this dispute are generally uncontroverted, the ultimate question of whether an impasse existed on April 12, 1994, can only be answered by evaluating and weighing that evidence, and by examining the relevant legal authorities. As the Court of Appeals for the District of Columbia has recognized, the question of the existence of an impasse is one “of fact involving the Board’s presumed expert experience and knowledge of bargaining problems.” Dallas Gen. Drivers Local Union No. 715 v. NLRB, 355 F.2d 842, 844 (D.C.Cir.1966). Indeed, the court recognized that “few issues are less suited to appellate judicial appraisal ... or better suited to the expert experience of a board which deals constantly with such problems.” Id. at 844-45.

B.

The relevant criteria for determining the existence of an impasse were explicitly identified by the Board in Taft Broadcasting Co., 163 N.L.R.B. 475, 478, 1967 WL 18808 (1967):

The bargaining history, the good faith of the parties in negotiations, the length of the negotiations, the importance of the issue or issues as to which there is disagreement, the contemporaneous understanding of the parties as to the state of negotiations are all relevant factors [the trier of fact should consider] in deciding whether an impasse [existed.]

Id. at 478. We review those criteria seriatim.

1. Bargaining History

Although the parties here — Grinnell and the Union — have a relationship that goes back several decades, this was the first instance where Grinnell was bargaining independently and directly with the Union. In the past, Grinnell had committed itself to bargain through and be bound by the NFSA. As the ALJ correctly found, such a short bargaining history “would dictate giving the parties a fuller opportunity to effect an agreement than occurred here.” Grinnell, 328 N.L.R.B. No. 76 at 12. This is especially true considering the extensive changes to the benefits and wages of the employees that Grinnell was proposing. See Harding Glass Co., 316 N.L.R.B. 985, 991 (1995).

2. Good Faith and Length of Negotiations

We accept the view of the ALJ and the Board that, prior to the unilateral implementation of its final contract offer, Grin-nell bargained in good faith with the Union.⁹ See AMF Bowling, 63 F.3d at 1299. In AMF, we stated that good faith is a “powerful fact” weighing in the employer’s favor, “from which we may infer that[the employer] made a bona fide effort to reach agreement.” Id. However, section 8(a)(5) of the Act can be violated by an employer “without also finding the employer guilty of overall subjective bad faith.” Katz, 369 U.S. at 747, 82 S.Ct. 1107.

Although Grinnell bargained with the Union in good faith, on April 12, 1994, against the background of the agreement reached between the Union and NFSA (and Grinnell’s understanding of the consequences of that agreement), the negotiations between Grinnell and the Union clearly changed. Notwithstanding that Preuett had been bargaining on behalf of the Union for only two weeks, and in that period significant progress had been made, Grinnell was unwilling to negotiate further. During Preuett’s stewardship, there were only four bargaining sessions, totalling “no more than 13 hours of actual bargaining with much of the 4-hour session on March 30 devoted to introductions and general discussion.” Grinnell, 328 N.L.R.B. No. 76 at 13.¹⁰

Of course, the limited duration of the relevant negotiations does not, standing alone, contravene our conclusion that Grin-nell negotiated in good faith until April 13, 1994, when it unilaterally implemented its final contract offer. See, e.g., Lou Stecher’s Super Markets, 275 N.L.R.B. 475, 476-77 (1985) (good faith impasse existed after only three bargaining sessions). However, the brevity of the relevant bargaining period gives the factual determination that no impasse existed — made by both the ALJ and the Board — a pronounced appearance of reasonableness.

3. Importance of the Issues Remaining

In support of its assertion that negotiations had reached impasse, Grinnell points to allegedly unresolvable issues that remained, emphasizing the significance of those issues. It also points out that, when the issues separating the parties are of great importance to one or both of them, a finding of impasse is more likely. See Hyatt Regency Memphis, 296 N.L.R.B. 259, 315-16, 1989 WL 224313 (1989), enforced, 944 F.2d 904 (6th Cir.1991) (“[impasse] may be reached even after a few bargaining sessions where the subject of the change is of supreme importance to an employer with respect to its ability to compete.”).

Here, Grinnell urges that it repeatedly sought wage relief and a new targeting program that would give it (rather than the Union) the unilateral right to reduce wages on jobs with non-union bidders. Grinnell consistently maintained that a fixed targeting rate was essential for a settlement. The Union, on the other hand, insisted on retaining the right to control targeting. Purporting to have seen no movement on these key issues, Grinnell made its final contract offer to the Union on April 12,1994. This offer increased the targeting rate and enhanced health and pension benefits. The Union countered with a proposal substantially similar to the one it had made earlier that day, with minor modifications. Based on its perception that the Union was not making any movement, Grinnell argues that it “reasonably and objectively concluded that the parties were deadlocked.”

Grinnell’s characterization of the negotiations is unavailing. As the Board properly concluded, this was a typical labor dispute over a “matter of dollars,” and there was no reason to believe that the parties’ disagreements could not be resolved with further bargaining. Indeed, the parties had made significant strides -towards reaching an agreement during the period that Preuett functioned in his role of chief Union negotiator. For example, Grinnell had increased its proposed targeting rate from 65% to 80%. On health, welfare, and pension contributions, Grinnell had retreated from its proposal to implement the Tyco regime, indicating that it would accept the Union’s proposal if the company’s contributions were reduced.

The Union had also demonstrated continuing willingness to compromise. It had made two proposals that reduced Grin-nell’s health, welfare, pension, and SIS contributions. It had also brought in Green, a benefits expert, to study the Tyco plan.¹¹ On wages, the Union had proposed that local wage rates be fixed by mutual agreement, and it later dropped a proposal for a wage increase. Lastly, at the final bargaining session on April 12, 1994, the Union proposed wage reductions in some states and asked for identification of those states where Grinnell needed further reductions. In sum, on April 12,1994, as the Board found, the Union’s positions were clearly flexible. Further negotiations could well have led to an agreement encompassing all the outstanding issues.¹²

4. Contemporaneous Understanding of the Parties

Grinnell insists that an impasse existed on April 12, 1994, because, in its view, the Union would not accept an agreement whose terms differed significantly from those in the Union’s new agreement with NFSA. Grinnell also asserts that the Union’s only concern was to preserve uniformity within the industry by forcing Grin-nell to agree to the same terms as those found in the NFSA agreement. According to Grinnell, the Union’s strategy was to close the deal with NFSA first, and then demand that Grinnell accept the NFSA deal. Indeed, Grinnell argues that the Union was wedded to the agreement it had already signed with NFSA, and therefore could offer only the proposals and terms contained therein. Grinnell believes that this position is indicative of the Union’s unwillingness to compromise, and therefore mandates a finding of impasse.

Grinnell’s depiction of the Union’s position finds no objective basis in the facts determined by the ALJ and the Board. The Union never proposed that Grinnell simply accept the terms of the NFSA agreement. As the Board recognized, “the Union continued to demonstrate its willingness to compromise by giving [Grinnell] proposals which differed from those in the NFSA agreement.” Grinnell, 328 N.L.R.B. No. 76 at 2. Furthermore, the Board correctly found Grinnell’s contention undermined by the Union’s refusal to accede to a “most favored nation” clause in the NFSA agreement.¹³ “By not agreeing to such a clause in the NFSA contract, Preuett would be able to give concessions to [Grinnell] without eroding the employees’ terms and conditions of employment with NFSA employers.” Grinnell, 328 N.L.R.B. No 76 at n. 4.

The record strongly supports the conclusions of the ALJ and the Board that the Union remained open and willing to negotiate on April 12, 1994. The Board, in reaching its determination in this regard, relied on the following: (1) during the final session on April 12, the Union continued to declare its intention to be flexible; (2) when Chatilovicz stated that Grinnell would treat a proposal offered by the Union at that point to be the Union’s final offer, Preuett explicitly denied that assertion; (3) Preuett made specific inquiries about “how far apart the parties were” and “in which states [Grinnell] needed movement on wage rates”; (4) after Grinnell rejected the Union’s proposal, Chatilovicz told Preuett that he would be in his office until 6:00 p.m., giving Preuett his telephone number if he wanted to talk further; (5) Preuett took Chatilovicz up on this offer, phoning him at 6:00 p.m. to request a meeting the following day; (6) during this conversation, Preuett expressed the Union’s continued desire to have Grinnell raise its proposed wage rates;¹⁴ and (7) Preuett suggested that the parties possibly resort to federal mediation.

The Board correctly observed that Grinnell’s asserting of its “final position” did not, by itself, require a finding of impasse. Grinnell, 328 N.L.R.B. No. 76 at 1 (citing, inter alia, PRC Recording Co., 280 N.L.R.B. 615, 640, 1986 WL 54002 (1986), which held that for impasse to occur, both parties must be unwilling to compromise, enforced, 836 F.2d 289 (7th Cir.1987)). Indeed, the Board reasoned that “it would be both erroneous as a matter of law and unwise as a matter of policy for the Board to find impasse merely because the [Union] is unwilling to capitulate immediately and settle on [Grinnell’s] unchanged terms.” Grinnell, 328 N.L.R.B. No. 76 at 2. This conclusion is consistent with precedent such as Powell Elec. Mfg. Co., 287 N.L.R.B. 969, 1987 WL 90135 (1987), where the Board held that futility, rather than mere frustration, discouragement, or apparent gamesmanship, is necessary to establish impasse. Id. at 973. Put simply, Grinnell’s argument of impasse is premised on its own unwillingness — rather than that of the Union — to compromise. As the Board stated, “[Assuming arguendo that [Grinnell] has demonstrated it was unwilling to compromise any further, we find that it has fallen short of demonstrating that the Union was unwilling to do so.” Grinnell, 328 N.L.R.B. No. 76 at 2.¹⁵

Grinnell also argues that, despite Preuett’s stated intention, further negotiations would have been futile, since “important issues” remained where no progress had been made. Furthermore, according to Grinnell, the olive branches offered by the Union on the last day of negotiations, ie., incremental wage improvements, did not demonstrate a genuine willingness to compromise on the crucial issues. The Board has repeatedly held that inconsequential modifications that fail to address the heart of the employer’s demands cannot forestall impasse. See Prentice-Hall, Inc., 306 N.L.R.B. 31, 1992 WL 12062 (1992); Times-Herald, 223 N.L.R.B. 505, 1976 WL 6826 (1976). Accordingly, Grin-nell maintains that the Board’s characterization of the Union’s last offer as a “significant concession” was erroneous.

Grinnell, however, inappropriately downplays the importance of the Union’s concessions to reach an agreement. As the Board found, these concessions constituted significant progress towards the goal desired by Grinnell — lower wages for competitive commercial contracts. Grinnell, 328 N.L.R.B. No. 76 at 2. On April 12, 1994, the Union made a detailed proposal offering significant discounts varying by states, which Grinnell rejected. Preuett asked Grinnell to identify the states in which the company required a larger discount, but Grinnell refused to consider this inquiry. Instead, Grinnell declared the existence of impasse, despite the Union’s clearly expressed intentions to reach an agreement. Grinnell, 328 N.L.R.B. No. 76 at 2.

As the ALJ and the Board both found, Preuett earnestly desired to reach an agreement, believed an agreement could be reached, and continued to explore negotiations and options in pursuit thereof. Any suggestion to the contrary necessarily contemplates that Preuett made his statements of April 12 concerning the Union’s desire for an agreement either in bad faith (contemplating the legal ramifications and trying to avoid impasse), or without actual understanding of Grinnell’s position. There is simply no support in the record for either such finding, and we decline to second-guess the ALJ and the Board by divining one.

5. Conclusion

In the context of the record here, and in light of the deferential standard of our review of the Order, we must conclude that the Board’s finding that “there was no impasse in bargaining” is supported by substantial evidence.

C.

On April 13, 1994, Grinnell sent a letter to all its employees, informing them of the strike by the Union and their right to remain working. Grinnell’s letter explained that all employees had the right to resign their union membership, and even if they did not resign they could remain working. It also informed the employees of Grinnell’s intention to hire permanent replacement workers.¹⁶ The Union, in its initial complaint to the Board on April 15, 1994, alleged that Grinnell’s letter threatened the employment status of its employees engaging in the strike, in violation of sections 8(a)(1) and (3). The ALJ agreed and found an unfair labor practice by Grin-nell in this connection. The Board then affirmed the ALJ with no discussion.¹⁷ Section 8(c) of the Act protects an employer’s right to communicate with its employees, as long as the employer’s statements do not contain a “threat of reprisal or force or promise of benefit.” Section 8(c)’s protection has been extended to an employer’s right to inform employees of its intention to hire permanent replacements in the event of a strike. Eagle Comtronics, Inc., 263 N.L.R.B. 515, 515 (1982).

Because the ALJ concluded that the Union’s strike was an “unfair labor practice” strike — in which case the striking employees would have the right to be reinstated — the ALJ also found that Grinnell’s letter threatened the employment status of the strikers by implying that they could be permanently replaced. That is, Grinnell’s letter was threatening because it did not specify that Grinnell could hire permanent replacements only in the event of an “economic” strike. The ALJ’s conclusion was correct, and we will enforce the Board’s Order in this regard.¹⁸

IV.

The Union also petitions for our review of the Order, asserting that Grinnell failed to bargain in good faith from the outset of the negotiation process. According to the Union, Grinnell was not interested in reaching an agreement; rather, it was attempting to “obliterate its longstanding union relationship.” Grinnell, 328 N.L.R.B. No. 76 at 13.

The Board’s finding of good faith bargaining “must be upheld unless the determination has no rational basis in the record.” Allbritton Communications Co. v. NLRB, 766 F.2d 812, 817 (3d Cir.1985). In this case, the ALJ found that the evidence failed to establish that Grinnell’s bargaining prior to its premature termination of negotiations was in bad faith. This determination by the ALJ was premised on several factors: (1) Grinnell’s proposals on wages and benefits were not so unreasonable or harsh as to warrant a finding that they were put forward to frustrate the bargaining process; (2) Grinnell made modifications and concessions during the negotiations; and (3) Grinnell made itself available and accommodated the Union with respect to the timing and location of negotiation sessions.

An employer does not violate its duty to bargain in good faith merely by seeking reductions in existing wages and benefits. See, e.g., Brooks, Inc., 251 N.L.R.B. 757, 763, 1980 WL 12272 (1980). Nor does Grinnell’s decision to pay eight of its nonstriking employees (out of 1100 to 1200 bargaining unit employees) higher wage rates than those set forth in its final offer constitute bad faith. While the ALJ found Grinnell’s action in this regard to constitute a separate violation of the Act, Grinnell, 328 N.L.R.B No. 76 at 23, this finding did not lead either the ALJ or the Board to conclude that Grinnell acted in bad faith. We agree with the Board that, in light of the small number of affected employees, and the instigation of the viola-tive conduct by a district manager disassociated with the negotiations between Grin-nell and the Union, the evidence does not mandate a finding of bad faith on the part of Grinnell. See Grinnell, 328 N.L.R.B. No. 76 at 22-23; Litton Systems, Inc., 300 N.L.R.B. 324, 330, 1990 WL 179692 (1990), enforced, 949 F.2d 249 (8th Cir.1991).

The Board’s finding that Grinnell acted in good faith prior to its premature implementation of its final contract offer is supported by substantial evidence. There is no legal basis for us to disrupt this finding, and we decline to do so.

V.

We find no reason to disturb the Board’s careful analysis of these complicated labor negotiations, and we conclude that the Order of the Board is supported by substantial evidence. We thus deny Grinnell’s petition for review. We grant the Board’s cross-application for enforcement of its Order and deny the Union’s petition for review.

PETITIONS FOR REVIEW DENIED AND CROSS-APPLICATION FOR ENFORCEMENT GRANTED

1 . The Board decision appealed from is Grinnell Fire Prot. Sys. Co., 328 N.L.R.B. No. 76, 1-7, 1999 WL 357628 (May 28, 1999).

2 . The ALJ’s decision can be found at Grinnell, 328 N.L.R.B. No. 76 at 7-25.

3 . According to Grinnell, the changes embodied in this proposal were designed to address concerns over its declining market share to non-union competition, because overall labor costs under its agreement with the Union were considerably higher than those of nonunion operations.

4 . As explained further in Part III.B.3, infra, the ALJ found that "under the circumstances, the only bargaining sessions that should be considered in determining the impasse question were those in which Preuett represented the Union.” Grinnell, 328 N.L.R.B. No. 76 at 13.

5 . This session occurred one day before the existing agreement between the Union and NFSA was to expire. The Union was negotiating with NFSA on the same date at the same hotel.

6 . Of importance, on April 8, 1994, the Union and NFSA had reached an agreement. Grin-nell was aware of this fact on April 12, 1994, and it knew the details of the agreement.

7 . Amended complaints were filed on September 29 and December 1, 1995.

8 . These sections of the Act provide in pertinent part as follows:

It shall be an unfair labor practice for an employer—

(1) to interfere with, restrain, or coerce employees in the exercise of the rights [to engage in labor activities] ...;

(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization ...;

(5) to refuse to bargain collectively with the representatives of his employees....

9 . See infra Part IV.

10 . The ALJ determined that the negotiations that included Preuett were the probative events. Indeed, as noted supra at note 4, the ALJ found that "the only bargaining sessions that should be considered in determining the impasse question were those in which Preuett represented the Union.” We agree.

11 . Grinnell's own expert acknowledged that Green’s questions were proper.

12 . That both Grinnell and the Union wanted control of targeting, and that Grinnell saw this as an important issue, does not compel a different conclusion here. The parties agreed on the most important aspect of the targeting program — the standard to be used in determining which jobs were targeted. Significant progress was made on the rates and benefits that Grinnell would pay for targeted jobs. Furthermore, the targeting program had been implemented successfully for years prior to the Union's removal of Grinnell’s participation. Given this history and that the parties were in accord on many of the details of the targeting program, the Board's determination that a compromise on targeting was still possible is amply supported by the evidence.

13 .A "most favored nation” clause would have obligated the Union to give the NFSA employers any concession that was given to Grinnell. See, e.g., Associated Milk Dealers v. Milk Drivers Union Local 753, 422 F.2d 546 (7th Cir.1970).

14 . The parties dispute exactly what was said during this conversation on the evening of April 12, 1994. However, in a crucial credibility finding, the ALJ concluded that "during this conversation, Preuett did not say that he would not lower his proposed wage rates and benefits. Rather, he said that he was not willing to agree to the rates in [Grinnell's] final offer.” Grinnell, 328 N.L.R.B. No. 76 at 2 (emphasis in original). We must of course defer to the credibility finding of the ALJ. "It is normally not the role of reviewing courts to second-guess a fact-finder’s determinations about who appeared more ‘truthful’ or ‘credible.’ ” Fieldcrest Cannon, Inc. v. N.L.R.B., 97 F.3d 65, 71 (4th Cir.1996).

15 . The dissenting Board Member asserted that the decision of the Board "will allow the parties to create or defeat impasse simply by self-declaration.” Grinnell, 328 N.L.R.B. No. 76 at 9. That concern may be valid: just as impasse cannot be declared by fiat, it cannot be avoided simply by a self-serving statement that no impasse exists. Nonetheless, because the standard is an objective one, the possibility of unilateral avoidance is remote. That an evaluation of the objective evidence often encompasses subjective determinations does not increase the risk of caprice. If a party is willing to negotiate to a point that an agreement might be reached, no impasse exists. And we can hardly conceive of better evidence of a party’s willingness to satisfactorily negotiate further than its clear statement to that effect.

16 . GrinneD's letter to its employees of April 13, 1994, stated in part:

We just learned that the Union has called a strike against Grinnell. Although the Union has the right to strike, Grinnell has the right to run its business. Grinnell must do so in order to meet its commitments to its customers and to keep those customers from going elsewhere. We also have an obligation to those employees who want to work.

Each of our employees has the right to work and may do so even though a strike has been called. As we told you before, if you are a union member and you choose to work, you may be fined unless you resign your membership. If you resign you may not be fined. Also, if the strike ends, you will have the right to continue working for Grinnell so long as you pay your dues.

If some of our employees strike, we will hire permanent replacements to perform our work. Permanent replacements have the right to work even if a strike ends.

17 . The ALJ found, however, and we agree, that Grinnell’s letter did not constitute a “constructive discharge” of striking employees in violation of section 8(a)(3). The Union appeals this ruling, asserting that this case is indistinguishable from Noel Foods Div. of Noel Corp., 315 N.L.R.B. 905, 907-08, 1994 WL 706201 (1994), where the Board found constructive discharge when the employer falsely advised employees on the eve of strike that they "would be permanently replaced” at its commencement. The statement was false because insufficient replacements had been obtained to replace all the potential strikers.

By contrast, Grinnell’s letter contained no false statements. Rather, the letter simply informed the employees that they were subject to permanent replacement in the event of a strike.

18 . The Board also affirmed the ALJ's findings of additional violations that are not contested in this Court. We thus enforce the uncontested aspects of the Order as well. See NLRB v. Cast-A-Stone Products Co., 479 F.2d 396, 398-99 (4th Cir.1973).