United Steel Paper v. NLRB ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-3885
U NITED STEEL, P APER AND F ORESTRY,
R UBBER, M ANUFACTURING, E NERGY,
A LLIED INDUSTRIAL AND SERVICE
W ORKERS INTERNATIONAL U NION,
AFL-CIO,
Petitioner,
v.
N ATIONAL L ABOR R ELATIONS B OARD ,
Respondent.
Petition for Review of an Order of the
National Labor Relations Board.
No. 26-CA-20861
A RGUED M AY 30, 2008—D ECIDED S EPTEMBER 15, 2008
Before B AUER, R IPPLE and W OOD , Circuit Judges.
R IPPLE, Circuit Judge. United Steel, Paper and Forestry,
Rubber, Manufacturing, Energy, Allied Industrial and
Service Workers International Union, AFL-CIO (“Union”)
2 No. 07-3885
filed a charge with the National Labor Relations Board
(“NLRB” or “Board”) in which it alleged that Jones Plastic
and Engineering Company (“Jones Plastic”) had violated
sections 8(a)(1) and (3) of the National Labor Relations
Act (“NLRA” or “Act”). The Union claimed that Jones
Plastic had violated the NLRA by refusing to reinstate
economic strikers following the Union’s unconditional
offer to return to work because all of Jones Plastic’s previ-
ously hired strike replacements were temporary employ-
ees. In its answer, Jones Plastic claimed that all of the
strike replacements were permanent employees. The NLRB
ruled in favor of Jones Plastic, overruling in part its prior
decision in Target Rock Corp., 324 N.L.R.B. 373 (1997), enf’d,
172 F.3d 921 (D.C. Cir. 1998), and it dismissed the Union’s
complaint. The Union now petitions for review of the
Board’s decision.
For the reasons set forth in this opinion, we deny the
Union’s petition for review.
I
BACKGROUND
A. Facts
In April 2001, the Union was certified as the representa-
tive of a unit of employees at Jones Plastic’s plant in
Camden, Tennessee. After protracted negotiations for
an initial collective bargaining agreement, 53 of the
75 employees in the collective bargaining unit began an
economic strike on March 20, 2002.
No. 07-3885 3
In late March 2002, Jones Plastic began hiring replace-
ment employees for the workers on strike. It hired a
total of 86 replacements during the strike, and each re-
placement completed Jones Plastic’s standard application
for employment. Fifty-three replacements were hired in
place of a specific striker, and each of these replacements
signed a form reciting:
I [name of replacement employee] hereby accept
employment with Jones Plastic & Engineering Com-
pany, LLC, Camden division (hereafter “Jones Plastic”)
as a permanent replacement for [name of striker]
who is presently on strike against Jones Plastic.
I understand that my employment with Jones Plastic
may be terminated by myself or by Jones Plastic at any
time, with or without cause. I further understand that
my employment may be terminated as a result of a
strike settlement agreement reached between Jones
Plastic and the U.S.W.A. Local Union 224 or by order
of the National Labor Relations Board.
Jones Plastic & Eng’g Co. & United Steel Workers, 351 NLRB
No. 11, *2 (Sept. 27, 2007). The remaining 33 replacements,
who were hired in place of replacements who had quit,
executed a form stating that the replacement was a perma-
nent replacement for an unnamed striker.
The record reveals that Sylvia Page, the Human Re-
sources Manager of Jones Plastic, informed one striker
replacement that he was a full-time and permanent em-
ployee. Another replacement employee was hired in mid-
May 2002, and he quit his old job to work for Jones Plastic
as a replacement employee; this employee believed that
4 No. 07-3885
he was a permanent employee. A third replacement
employee was hired in early June 2002, and Page told
her that she was a full-time employee; she believed that
she was a permanent employee because she received the
same pay and benefits that the striking employees had
received.
On July 31, 2002, the Union made, on behalf of the
striking employees, an unconditional offer to return to
work. That same day, Jones Plastic sent the Union a letter
stating that it had a full complement of employees, includ-
ing permanent replacements. Therefore, the letter stated,
the strikers would not be reinstated immediately, but
they would be placed on a preferential recall list. Between
September 5 and September 19, Jones Plastic offered
reinstatement to 47 strikers, of whom 18 accepted.
B. Proceedings Before the NLRB
The Union filed a charge alleging that Jones Plastic had
violated sections 8(a)(1) and (3) of the NLRA when it
refused to reinstate economic strikers after the Union’s
unconditional offer to return to work. It maintained that
all of Jones Plastic’s strike replacements were temporary,
not permanent, employees. Jones Plastic defended by
asserting that all of the strike replacements were perma-
nent replacements. The NLRB ruled in favor of Jones
Plastic and, in the course of its decision, overruled in part
its prior decision in Target Rock Corp., 324 N.L.R.B. 373 (1997),
enf’d, 172 F.3d 921 (D.C. Cir. 1998). Accordingly, it dis-
missed the Union’s complaint.
No. 07-3885 5
The majority and dissenting members of the Board
agreed about the general principles governing the rights
of economic strikers and replacement workers. An eco-
nomic striker who unconditionally offers to return to work
is entitled to reinstatement immediately unless the em-
ployer can show a legitimate and substantial business
justification for refusing immediate reinstatement. Jones
Plastic, 351 NLRB No. 11, at *5, *12 (citing NLRB v.
Fleetwood Trailer Co., 389 U.S. 375, 378 (1967)). One such
business justification is an employer’s permanent replace-
ment of economic strikers as a means of continuing
its business operations during a strike. Id. (citing Mackay
Radio & Tel. Co. v. NLRB, 304 U.S. 333, 345-46 (1938)). Thus,
at the conclusion of a strike, an employer is not bound to
discharge those hired to fill the places of economic
strikers if it made assurances to those replacements that
their employment would be permanent; permanence
means that they would not be displaced by returning
strikers. Id. The business justification defense is an affirma-
tive defense, and the employer has the burden of proving
that it hired permanent replacements. Id. To meet its
burden, the employer must show a “mutual understanding
of permanence” between itself and the replacements. Id.
Despite agreeing on these general principles, the
majority and dissent differed on two interrelated issues:
first, how an employer may prove that an at-will em-
ployee is permanent; and second, how the Board’s
decision in Target Rock affected the present case. The
majority explained that, in its view,
the Target Rock majority opinion suggests that [Jones
Plastic’s] at-will disclaimers informing employees that
6 No. 07-3885
their employment was for “no definite period” and
could be terminated for “any reason” and “at any time,
with or without cause” detract from its showing of
permanent replacement status. We disagree. That view
is based on a misreading of controlling law and is
inconsistent with the basic scheme of the Act. We
therefore decline to follow it.
Id. at *4. The majority held that the evidence that Jones
Plastic had presented was sufficient to establish that the
replacement employees were permanent. Specifically, it
noted that: the forms that the replacement employees had
signed stated that they were permanent replacements
for striking employees; Jones Plastic told the striking
employees that it had begun to hire permanent replace-
ments; and its human resources manager had told at least
one replacement that he was a permanent employee.
The majority also rejected the Union’s petition for “a rule
requiring employers that seek to hire at-will permanent
replacements to explicitly advise employees that they
cannot be discharged to make way for returning strikers.”
Id. at *6 n.9. The majority declined to adopt such a rule
and held that Jones Plastic implicitly had advised new
employees that they were permanent. In the Board’s view,
such implicit advice was sufficient:
While [the Union’s explicit] language to that effect
would support a finding of permanent replacement
status, the Board has in the past eschewed a require-
ment that specific language be used to establish the
required mutual understanding of “permanent”
employee status. Where, as here, that understanding
No. 07-3885 7
is established without the use of such language, we
will continue to find that strikers have been perma-
nently replaced.
Id. (citation omitted).
The majority also rejected the Union’s contention that,
“for replacements to be permanent, there must be an
enforceable contract between the replacement and the
employer.” Id.
No requirement of this nature has ever been imposed
by any Board or court decision. In Belknap [v. Hale, 463
U.S. 491 (1983)], the Supreme Court did not hold that
there must be an enforceable contract to establish
permanent replacement status. Instead, the Court
held only that the Act did not preclude the enforce-
ment of such a contract if it existed. Moreover, this
proposed standard would make the determination of
permanent replacement status dependent on whether
an enforceable contract was formed under State law.
The requirements for formation of such a contract
will necessarily vary from one state to another,
whereas the Board is charged with fashioning a uni-
form national labor policy.
Id.
The dissent, in contrast, believed that the majority had
mischaracterized the Target Rock majority opinion:
What then, does Target Rock stand for? It applied
existing law concerning the requirement of a mutual
understanding of permanent replacement to its partic-
ular facts. As for the [Target Rock] majority’s state-
8 No. 07-3885
ment that the employer’s expression of its at-will
policy did not support a finding of permanent status,
that is a truism. The [Target Rock] majority did not say
that at-will employment was incompatible with perma-
nent replacement, nor even that it was evidence
against a finding of permanent replacement. The
[Target Rock] majority merely stated that an employer’s
avowal of an at-will policy does not lend support to
an affirmative defense of permanent employment.
Like the Target Rock majority, we regard that as “obvi-
ous.”
Prior to Target Rock, the Board had held that at-will
employment was not incompatible with permanent
replacement status. J.M.A. Holdings, [310 N.L.R.B. 1349,
1358 (1993)]. In Target Rock, the Board did not overrule
J.M.A. Holdings or even mention it. In the final analysis,
neither Target Rock nor any other case stands for the
proposition that the majority purports to overrule. In
our view, the majority’s strained effort to overrule a
nonexistent holding can be explained only by its
desire to reverse precedent.
Although we disagree with the majority’s determina-
tion in the present case that the replacements were
permanent, that disagreement has nothing to do with
Target Rock, properly understood. Rather, it turns on
the facts of the case: [Jones Plastic] has simply failed
to establish the existence of the requisite mutual
understanding of permanent status.
Jones Plastic, 351 NLRB No. 11, at *9-10 (Liebman & Walsh,
Members, dissenting) (footnotes omitted).
No. 07-3885 9
With respect to the evidence in the case before it, the
dissenting members believed that there was no mutual
understanding of permanence between Jones Plastic and
the replacement employees. The dissenting members
explained:
The replacements here were required to sign a
statement stating that they were “permanent
replacement[s],” but that they could be “terminated . . .
at any time, with or without cause.” The statement
then stated, “I further understand that my employment
may be terminated as a result of a strike settlement
agreement . . . or by order [of] the National Labor
Relations Board.”
Had [Jones Plastic] made only the latter statement, a
finding that the replacements were permanent would
follow. But [Jones Plastic] did not so limit itself. Rather,
it told the employees not only that they could be
displaced as a result of a strike settlement or Board
order, but, additionally, that they could be discharged
at any time for any reason. Taken together—and absent
any other evidence of mutual understanding of perma-
nence—[Jones Plastic’s] statements did not reflect any
commitment by [Jones Plastic] to the replacements.
Certainly, the statements did not reflect a commitment
that [Jones Plastic] would refuse, in the absence of a
strike settlement, to reinstate strikers if it meant
terminating replacements. Although [Jones Plastic]
used the term “permanent replacement,” it then
undercut that statement by failing to give the replace-
ments any assurance that they had rights vis-à-vis the
10 No. 07-3885
strikers. In the words of Belknap [v. Hale, 463 U.S. 491
(1983)], [Jones Plastic]’s statements, like those of the
employer in Covington Furniture [Manufacturing Corp.,
212 N.L.R.B. 214 (1974)], created a situation in which “the
replacement could be fired at the will of the employer
for any reason; the employer would violate no promise
made to a replacement if it discharged some of them to
make way for returning strikers.” Or, in the simpler
formulation of the Board, [Jones Plastic], by its state-
ments, “kept [all] its options open.” Target Rock, supra
at 375. As a result, the evidence fails to support a
finding that [Jones Plastic] and the replacements
shared an understanding that the replacements were
permanent.
Id. at *10 (penultimate alteration in original).
II
DISCUSSION
A. Standard of Review
We review decisions of the NLRB deferentially. Multi-Ad
Servs., Inc. v. NLRB, 255 F.3d 363, 370-71 (7th Cir. 2001). The
Board’s legal conclusions shall be upheld if they are not
“irrational or inconsistent with the Act.” NLRB v. Fin. Inst.
Employees, 475 U.S. 192, 202 (1986); NLRB v. Town &
Country Elec., Inc., 516 U.S. 85, 89-90 (1995); Gen. Serv.
Employees Union v. NLRB, 230 F.3d 909, 912 (7th Cir. 2000).
The Board’s findings of fact will be reversed only if they
are not supported by substantial evidence on the record
taken as a whole, Universal Camera Corp. v. NLRB, 340 U.S.
No. 07-3885 11
474, 488 (1951); substantial evidence is “such relevant
evidence as a reasonable mind might accept as adequate
to support the Board’s conclusion,” Brandeis Mach. &
Supply Co. v. NLRB, 412 F.3d 822, 829 (7th Cir. 2005)
(explaining that the Board’s inferences and the con-
clusions that it draws from the facts also are entitled to
deference). We have cautioned, nevertheless, that our
deferential standard of review is not akin to the proverbial
rubber stamp: “We must ‘examine all of the evidence in
context to ensure the Board’s findings fairly and accurately
represent the picture painted by the record.’ ” Brandeis
Mach. & Supply Co., 412 F.3d at 829 (quoting NLRB v.
Clinton Elecs. Corp., 284 F.3d 731, 737 (7th Cir. 2002)).
The determination whether Jones Plastic had a “mutual
understanding of permanence” between itself and the
replacements is a question of fact, and therefore it is an
issue that we review under the substantial evidence
standard. See NLRB v. Augusta Bakery Corp., 957 F.2d 1467,
1473 (7th Cir. 1992).
B. The Reinstatement Rights of Economic Strikers
The Union and its amicus, the AFL-CIO, contend that the
Board’s decision is contrary to Belknap, Inc. v. Hale, 463
U.S. 491 (1983). In support of this argument, the Union
points to the following language from Belknap:
An employment contract with a replacement promis-
ing permanent employment, subject only to settlement
with its employees’ union and to a Board unfair
labor practice order directing reinstatement of strikers,
12 No. 07-3885
would not in itself render the replacement a
temporary employee subject to displacement by a
striker over the employer’s objection during or at the
end of what is proved to be a purely economic strike.
Id. at 503 (emphasis added). According to the Union,
Belknap requires that, in order to hire a permanent replace-
ment, the employer must give the replacement an “en-
forceable promise” of permanence, i.e., a binding contract,
by reference to state law, not to discharge the replace-
ment in favor of a returning striker. In the Union’s view,
the NLRB’s decision here is problematic because it
permits an employer to manipulate the reinstatement
procedure by discharging ostensibly permanent replace-
ments to permit the recall of favored strikers. Because the
employer would determine the basis for reinstatement
in such a selective recall, continues the Union, the com-
pany’s reason may be lack of union fervor. The Union also
contends that Jones Plastic’s offer of permanent employ-
ment was illusory because it allowed Jones Plastic to keep
all of its options open. In the Union’s view, at-will employ-
ment and an employer’s right to hire permanent striker
replacements may be harmonized only by requiring
employers that seek to hire at-will, permanent replace-
ments to advise employees explicitly that they cannot be
discharged to make way for returning strikers but are
otherwise at-will employees.1
1
The Union suggests the following language: “I understand
that my employment with [the employer] may be terminated by
(continued...)
No. 07-3885 13
The General Counsel submits that an employer may
employ a permanent employee to replace a striker, while,
at the same time, hiring that replacement employee on
an at-will basis. The General Counsel believes that
Belknap does not require an employer to give a replace-
ment a legally enforceable agreement under state law in
order to make him permanent. In his view, Belknap was
limited to the issue of whether state causes of action were
preempted by the Wagner Act; he emphasizes that there
was no “at-will” disclaimer at issue in the case. The
General Counsel also asserts that the Union’s pro-
posal—that the employer be required to state specifically
that a replacement is employed at-will and may be termi-
nated for any reason provided that the termination is not
to make room for a returning striker—is too complicated
to be workable.
After reviewing the applicable legal standards, we
shall examine each of the Union’s arguments in turn.
1.
Economic strikers retain their status as employees
under section 2(3) of the NLRA, and they are entitled to
1
(...continued)
myself or [the employer], at any time, with or without cause, for
any reason other than to permit the return of a striker unless
the return of such striker is required by a strike settlement
agreement reached between [the employer] and [the union] or
by order of the [NLRB].” Reply Br. at 16-17.
14 No. 07-3885
reinstatement at the conclusion of the strike. 29 U.S.C.
§ 152(3).2 An employer who refuses to reinstate an eco-
nomic striker upon his unconditional return to work
therefore violates section 8(a)(1) and (3) of the Act, 29
U.S.C. §§ 158(1) & (3), unless the employer can demon-
strate a “legitimate and substantial business justification
for its failure to reinstate the employee.” NLRB v. Great
Dane Trailers, 388 U.S. 26, 34 (1967).
One legitimate and substantial business justification
under which an employer may refuse to reinstate
economic strikers is that it hired permanent replace-
ments to replace the striking employees. NLRB v. Mackay
Radio & Tel. Co., 304 U.S. 333, 345-46 (1938); NLRB v. Mars
Sales & Equip. Co., 626 F.2d 567, 572 (7th Cir. 1980). Since
the early days of the Act, the Supreme Court has recog-
nized that, during an economic strike, an employer has a
“right to protect and continue his business” and that an
employer does not commit an unfair labor practice by
making “assurance[s] . . . to those who accepted employ-
ment during the strike that if they so desired their places
might be permanent.” Mackay Radio, 304 U.S. at 345-46. We
have explained that “[t]he rationale for this exception to
the general rule is that the employer’s interest in con-
tinuing his business during a strike and the needed
2
Section 152(3) states: “The term ‘employee’ shall include . . .
any individual whose work has ceased as a consequence of, or
in connection with, any current labor dispute or because of any
unfair labor practice, and who has not obtained any other
regular and substantially equivalent employment . . . .” See
also NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378 (1967).
No. 07-3885 15
inducement of permanent employment to obtain replace-
ments is a sufficient business justification overcoming
protection for economic strikers.” Mars Sales, 626 F.2d at
573. In accordance with these principles, when an em-
ployer, in the course of an economic strike, has hired
permanent employees to replace striking employees, the
employer is not required to discharge the replacement
employees at the end of the strike to make way for the
formerly striking employees. Fleetwood Trailer Co., 389
U.S. at 378. Instead, the employer may postpone rein-
statement of these employees until positions become
available for which they are qualified. Mackay Radio, 304
U.S. at 345-46.
The burden of proving that a replacement employee
is permanent rather than temporary is on the employer.
Fleetwood Trailer Co., 389 U.S. at 378; Great Dane Trailers, 388
U.S. at 34-35. To discharge this burden, the employer must
establish that it had a “mutual understanding” of perma-
nence with the replacement employees. In re Consol.
Delivery & Logistics, Inc., 337 N.L.R.B. 524, 526 (2002), enf’d,
63 Fed. App’x 520 (D.C. Cir. 2003); Augusta Bakery Corp.,
957 F.2d at 1473. The key inquiry of the mutual under-
standing test is whether the employer and the replace-
ment employees “intended that the workers’ employment
not terminate at the conclusion of the strike.” Solar Tur-
bines, Inc., 302 N.L.R.B. 14, 15-16 (1991), aff’d, Int’l Ass’n of
Machinists & Aerospace Workers v. NRLB, 8 F.3d 27 (9th Cir.
1993) (unpublished). An employer, therefore, “must
show that the men who replaced the strikers were re-
garded by themselves and the [employer] as having
received their jobs on a permanent basis.” Ga. Highway
16 No. 07-3885
Express, 165 N.L.R.B. 514, 516 (1967). The Board has ex-
plained that, “[a]bsent evidence of a mutual understand-
ing, [an employer]’s own intent to employ the replace-
ments permanently is insufficient.” Consol. Delivery &
Logistics, Inc., 337 N.L.R.B. at 526.
In making this determination, the Board consistently
has considered all of the relevant circumstances. Kansas
Milling Co., 97 N.L.R.B. 219, 221 (1951) (examining the “entire
record”). The Board, for example, has examined the em-
ployer’s written and oral communications to the replace-
ment employees as well as the context in which the com-
munications occurred, see, e.g., Hansen Bros. Enters., 279
N.L.R.B. 741, 741-42 (1986); Augusta Bakery Corp., 957 F.2d
at 1473, whether the replaced employees were trans-
ferees from other plants operated by the employer, see,
e.g., Ga. Highway Express, 165 N.L.R.B. at 516-17, and whether
the replacements considered themselves permanent
employees or feared being replaced at the end of the
strike, see, e.g., Target Rock Corp., 324 N.L.R.B. 373, 374-75
(1997). Given this totality-of-the-circumstances approach,
the Board has found that employees who are hired on a
probationary basis or who are subject to further applica-
tion procedures, physical examinations or drug testing
are permanent employees for economic striker-replace-
ment purposes so long as there is a mutual under-
standing that the resolution of the strike will not affect
whether the employee is retained.3
3
See Solar Turbines, Inc., 302 N.L.R.B. 14, 15-16 (1991), aff’d, Int’l
Ass’n of Machinists & Aerospace Workers v. NRLB, 8 F.3d 27 (9th
(continued...)
No. 07-3885 17
Consistent with these principles, the Board has held that
an employee is not permanent where the employee’s job
depended not only on the employee’s performance
during the probationary period, but also on “when the
strikers came back to work.” Cyr Bottle Gas Co., 204 N.L.R.B.
527, 527 (1973), enf’d, 497 F.2d 900 (6th Cir. 1974); see also
Augusta Bakery Corp., 957 F.2d at 1473 (holding that the
replacements were temporary because, although the
replacements were told that “if they worked out and did
their job, they had a job,” the testimony of the replace-
ments indicated that they did not understand themselves
to be permanent employees). A similar result was reached
in Covington Furniture. There, the Board explained that
3
(...continued)
Cir. 1993) (unpublished) (concluding that, if “the replacement
workers and the [employer] intended that the workers’ employ-
ment not terminate at the conclusion of the strike, the fact that
the replacements had yet to complete these postinterview tests
at the conclusion of the strike did not render them temporary
workers subject to discharge”); see also J.M.A. Holdings, Inc., 310
N.L.R.B. 1349, 1349 (1993) (same result under similar circum-
stances, except that the employees were expressly advised that
they were employed on an “at-will” basis); C.H. Guenther & Son,
Inc., 174 N.L.R.B. 1202, 1212 (1969), enf’d, 427 F.2d 983, 985-86 (5th
Cir. 1970); Anderson, Clayton & Co., 120 N.L.R.B. 1208, 1214 (1958)
(employees subject to a “6-month probationary period for all
new employees during which [the employer] was free to
discharge, transfer, or otherwise handle an employee without
recourse” nevertheless were permanent employees); Kansas
Milling Co., 97 N.L.R.B. 219, 226 (1951) (30-day probationary
period).
18 No. 07-3885
the evidence did not disclose “any promise by [the em-
ployer] to the replacements that they were permanent
replacements.” Covington Furniture Mfg. Corp., 212 N.L.R.B.
214, 220 (1974), enf’d, 514 F.2d 995 (6th Cir. 1975) (emphasis
added). Given the absence of evidence of such a promise,
the Board noted that the “implication from the method
of hiring[] and the learning periods needed[] was that the
jobs might well be temporary.” Id. Finally, in Target Rock,
the case that the Board here overruled in part, the em-
ployer had placed a recruiting advertisement stating that
“all positions could lead to permanent full-time after the
strike.” 324 N.L.R.B. at 373 (second emphasis added). The
record did not establish, the Board explained, that “the
hires had reason to know, either from filling out the
application and notice of employment forms, having to
pass drug and alcohol screening tests, or receiving various
employment benefits, that they were permanent employ-
ees.” Id. Indeed, at one point during negotiations with
the union, the employer referred to the replacements as
“not permanent.” Id. at 374. The Board noted that the
“at-will” disclaimer used by the employer “obviously [did]
not support the [employer’s] position that the striker re-
placements were permanent.” Id. (citation omitted).
Although the replacement employees had been told
periodically that they were “permanent at-will employees,”
these assurances alone did not establish that the em-
ployer had a mutual understanding with the replace-
ments that the resolution of the strike would not affect
the replacements’ employment status. Id.
The results reached in these cases support comfortably
the Board’s rationale for allowing an employer to refuse
No. 07-3885 19
to discharge permanent replacements in favor of striking
employees. An employer has a right to continue to
operate his business during an economic strike. See Mackay
Radio, 304 U.S. at 345. To recruit replacement personnel
during such a strike, an employer may need to assure
those replacements that their positions do not depend
wholly upon the resolution of the strike.4 Mars Sales, 626
F.2d at 573. Thus, an employer has a “legitimate and
substantial business justification” for refusing to dis-
charge replacement employees with whom the em-
ployer established a mutual understanding of perma-
nence with respect to returning strikers. Fleetwood Trailer
Co., 389 U.S. at 378. As long as this mutual understanding
is established through an examination of the totality of
the circumstances, an employer may impose other condi-
tions of employment such as probationary periods,
further testing and at-will employment—conditions to
which the replacements would have been subjected even
in the absence of a possibility that returning economic
strikers might seek reinstatement in the jobs for which
the replacements are being hired. See Solar Turbines, 302
N.L.R.B. at 15-16.
4
We say “wholly” upon the resolution of the strike because, as
we shall explain in the next subsection, the Supreme Court in
Belknap v. Hale, 463 U.S. 491, 503 (1983), permitted an employer
to condition an offer of permanent employment on “settlement
with its employees’ union and [on] a Board unfair labor prac-
tice order directing reinstatement of strikers.”
20 No. 07-3885
2.
We do not believe that the Supreme Court’s decision
in Belknap is controlling. In Belknap, there was an
economic strike, and the company sought to hire perma-
nent replacements. It placed an advertisement seeking
applicants to “permanently replace striking warehouse
and maintenance employees.” 463 U.S. at 494. At all times
during the strike, even after the NLRB regional director
filed a complaint alleging that the employer had com-
mitted an unfair labor practice, the replacements were
assured that they were permanent; no “at-will” disclaimer
was at issue in the case. Subsequently, after negotiating
with the union, the employer agreed to discharge the
permanent replacements in favor of the striking employ-
ees. The permanent striker replacements sued in state court
alleging breach of contract and misrepresentation. The
Supreme Court granted certiorari to decide whether the
NLRA preempted the replacements’ state causes of action.
The Court held that there was no preemption of the
state court actions in question. Federal law permits, but
does not require, an employer to hire replacements
during an economic strike, the Justices explained; if those
replacements are “permanent,” within the meaning of
federal labor law, then the employer need not discharge
them in order to reinstate the strikers. As such, the Court
found preemption untenable:
But when an employer attempts to exercise this
very privilege by promising the replacements that
they will not be discharged to make room for re-
turning strikers, it surely does not follow that the
No. 07-3885 21
employer’s otherwise valid promises of permanent
employment are nullified by federal law and its other-
wise actionable misrepresentations may not be pur-
sued. We find unacceptable the notion that the
federal law on the one hand insists on promises of
permanent employment if the employer anticipates
keeping the replacements in preference to returning
strikers, but on the other hand forecloses damage
suits for the employer’s breach of these very promises.
Even more mystifying is the suggestion that the
federal law shields the employer from damages suits
for misrepresentations that are made during the
process of securing permanent replacements and are
actionable under state law.
Id. at 500 (citations omitted). The Court rejected the em-
ployer’s argument that the prospect of entertaining suits
filed by fired replacement employees would burden the
employer’s right to hire permanent replacements. This
argument, the Court believed, is
no[] more than [an] argument[] that . . . promises of
permanent employment that under federal law the
employer is free to keep, if it so chooses, are essen-
tially meaningless. It is one thing to hold that the
federal law intended to leave the employer and the
union free to use their economic weapons against one
another, but is quite another to hold that either the
employer or the union is also free to injure innocent
third parties without regard to the normal rules of law
governing those relationships. We cannot agree with
the dissent that Congress intended such a lawless
regime.
22 No. 07-3885
The argument that entertaining suits like this will
interfere with the asserted policy of the federal law
favoring settlement of labor disputes fares no better.
This is just another way of asserting that the employer
need not answer for its repeated assurances of perma-
nent employment or for its otherwise actionable
misrepresentations to secure permanent replacements.
We do not think that the normal contractual rights
and other usual legal interests of the replacements
can be so easily disposed of by broad-brush assertions
that no legal rights may accrue to them during a
strike because the federal law has privileged the
“permanent” hiring of replacements and encourages
settlement.
Id.
In a part of Belknap that the Union believes critical to
the present case, the Supreme Court recognized that its
holding—allowing innocent third-parties to sue in state
court for breach of contract or misrepresentation—could
prove costly to employers who hire permanent replace-
ment employees and thereby inhibit settlements between
employers and unions. Id. at 505 & n.9. The Court, accord-
ingly, indicated that employers could “condition” their
offers of “permanent” employment. The Court held that
an employer may hire a permanent replacement but
nevertheless state explicitly that the permanent replace-
ment may lose the job if the employer settles with the
striking employees’ union or if the NLRB issues an unfair
labor practice order directing reinstatement of strikers.
In the words of the Court:
No. 07-3885 23
An employment contract with a replacement promis-
ing permanent employment, subject only to settle-
ment with its employees’ union and to a Board unfair
labor practice order directing reinstatement of
strikers, would not in itself render the replacement a
temporary employee subject to displacement by a
striker over the employer’s objection during or at the
end of what is proved to be a purely economic strike.
The Board suggests that such a conditional offer
“might” render the replacements only temporary hires
that the employer would be required to discharge at
the conclusion of a purely economic strike. But the
permanent-hiring requirement is designed to protect
the strikers, who retain their employee status and are
entitled to reinstatement unless they have been perma-
nently replaced. That protection is unnecessary if the
employer is ordered to reinstate them because of the
commission of unfair labor practices. It is also mean-
ingless if the employer settles with the union and
agrees to reinstate strikers. But the protection is of
great moment if the employer is not found guilty of
unfair practices, does not settle with the union, or
settles without a promise to reinstate. In that eventual-
ity, the employer, although he has prevailed in the
strike, may refuse reinstatement only if he has hired
replacements on a permanent basis. If he has promised
to keep the replacements on in such a situation, dis-
charging them to make way for selected strikers
whom he deems more experienced or more efficient
would breach his contract with the replacements.
Those contracts, it seems to us, create a sufficiently
24 No. 07-3885
permanent arrangement to permit the prevailing
employer to abide by its promises.
Id. at 503-04 (citation omitted). In a footnote, the
Court explained that the Board’s decision in Covington
Furniture was not to the contrary. The Court noted that
in Covington Furniture “the replacements could be fired
at the will of the employer for any reason” and that “the
employer would violate no promise made to a replace-
ment if he discharged some of them to make way for
returning strikers, even if the employer was not required
to do so by the terms of a settlement with the union.” Id. at
505 n.8 (citing Covington Furniture Mfg. Corp., 212 N.L.R.B. at
214). The Union relies on this language to argue that an
employer cannot hire a permanent replacement unless
it offers the replacement a binding contract under state law.
We are not persuaded by the Union’s contention that
Belknap is controlling under the circumstances of the
present case. The Belknap Court held that federal labor
law did not preempt causes of action brought in state
court by aggrieved replacement employees. That
holding, to be sure, led the Court to alter the standard for
permanence, and the alteration of that standard was a
major point of contention among the various opinions
written in the case. Compare Belknap, 463 U.S. at 503-04 &
n.8 (opinion of White, J.), with id. at 513-17, 522-23
(Blackmun, J., concurring), and id. at 541 n.13 (Brennan, J.,
dissenting). Despite its alteration of the standard of
permanence, however, the Court did not, as the Union
submits, hold that an employer may avail itself of perma-
nent replacement employees only if it offers those em-
No. 07-3885 25
ployees a binding contract actionable under state law.
Indeed, rather than tightening the standard for perma-
nence, as the Union contends, the Court actually loosened
that standard: It allowed an employer to condition its
offers of permanent employment on its settlement with
the union and on an NLRB unfair labor practice order
directing reinstatement of strikers. See id. at 513 (Blackmun,
J., concurring) (criticizing the Court’s approach of allow-
ing employers to condition their offers of permanent
employment because “[s]uch a promise bears little resem-
blance to a promise of permanent employment”); id. at 541
n.13 (Brennan, J., dissenting) (“It is difficult to imagine . . .
how a conditional offer like the one described by the
Court could be construed as an offer of permanent em-
ployment.”). Shortly before the dictum that the Union
cites regarding Covington Furniture, the Court recognized
that simply because “the offer and promise of permanent
employment are conditional does not render the hiring
any less permanent if the conditions do not come to pass,”
and it also noted that “[a]ll hirings are to some extent
conditional.” Id. at 504 n.8; see also Gibson Greetings, Inc. v.
NLRB, 53 F.3d 385, 390 (D.C. Cir. 1995) (“Although . . . the
new ‘associates’ could be laid-off in the event of a business
slowdown . . . , such conditions do not render an offer of
employment non-permanent.” (citing Belknap, 463 U.S.
at 503-04 & n.8)).
Belknap’s recognition that an employer could hire per-
manent employees for economic striker-replacement
purposes is consistent with then-existing Board precedent.
As we have recounted, the Board consistently has
allowed employers to hire permanent employees while
concomitantly imposing certain conditions on their re-
26 No. 07-3885
tention, so long as there is a mutual understanding that
the employer’s desire to reinstate a striker will not cause
the replacement employee’s discharge. See Anderson,
Clayton & Co., 120 N.L.R.B. 1208, 1214 (1958) (employees
subject to a “6-month probationary period for all new
employees during which it was free to discharge, transfer,
or otherwise handle an employee without recourse”
nevertheless was a permanent employee).5 The Board never
has adopted a requirement that employers must offer
the putative permanent employees a binding contract of
employment under state law;6 nor has the Board adopted
5
See also J.M.A. Holdings, Inc., 310 N.L.R.B. at 1349 (concluding
that replacement workers were permanent—despite the fact that
the employees were expressly advised that they were employed
on an at-will basis and that “they had not completed the
employment application, physical, and drug test”—because
there was a mutual understanding that the resolution of the
strike would not affect whether the employees were retained);
Kansas Milling Co., 97 N.L.R.B. at 226; cf. NLRB v. Augusta Bakery
Corp., 957 F.2d 1467, 1473 (7th Cir. 1992) (holding that the
replacements were temporary because, although the replace-
ments were told that “if they worked out and did their job,
they had a job,” the testimony of the replacements indicated
that they did not understand themselves to be permanent
employees); Cyr Bottle Gas Co., 204 N.L.R.B. 527, 527 (1973)
(holding that an employee is not permanent where the em-
ployee’s job depended not only on the employee’s performance
during the probationary period, but also on “when the
strikers came back to work”).
6
We note that, despite the Union’s reliance on the Belknap
Court’s characterization of Covington Furniture, that case does
(continued...)
No. 07-3885 27
such a rule subsequent to Belknap.7
Consequently, we cannot accept the Union’s argument
that Belknap decided that an employer may avail itself of
permanent replacement employees only if it offers those
employees a binding contract actionable under state law.
6
(...continued)
not support the Union’s position. In Covington Furniture, the
Board did not have an opportunity to consider the effect of an
at-will employment disclaimer on an employer’s claim that it
had hired permanent employees because there was no at-will
employment disclaimer at issue. Moreover, and more to the
point, the Board found that the employer’s hiring offer was
“subject to cancellation” at the employer’s choice because there
was no evidence of “any promise by [the employer] to the
replacements that they were permanent replacements.”
Covington Furniture Mfg. Corp., 212 N.L.R.B. 214, 220 (1974), enf’d,
514 F.2d 995 (6th Cir. 1975) (emphasis added). Given the
absence of evidence of such a promise, the Board further noted,
the “implication from the method of hiring, and the learning
periods needed, was that the jobs might well be temporary.” Id.
7
In Solar Turbines, for example, the Board relied on Belknap’s
observation that all hirings are to some extent conditional in
holding that “so long as the replacement workers and the
[employer] intended that the workers’ employment not termi-
nate at the conclusion of the strike, the fact that the replace-
ments had yet to complete these postinterview tests at the
conclusion of the strike did not render them temporary
workers subject to discharge.” 302 N.L.R.B. at 15-16 (footnote
omitted).
28 No. 07-3885
3.
The Union next submits a series of related arguments
for why the Board’s decision is inconsistent with the
Act. Echoing the observations of one of the dissenting
Board members, it contends that Jones Plastic’s purported
offer of permanent employment was illusory for purposes
of federal labor law because it allowed the company to
keep all of its options open and therefore permitted Jones
Plastic to manipulate the reinstatement procedure by
discharging permanent replacements in order to recall
selected strikers under whatever standard suited the
company. An employer could decide, for example, to
reinstate strikers who exhibit a lack of union fervor.
We cannot accept the Union’s assertion that Jones Plas-
tic’s offer of permanent employment was illusory because
it somehow kept all of Jones Plastic’s options open. Such
a characterization misapprehends the Board’s decision.
Although the Board overruled its previous decision in
Target Rock, it did so only to the extent that Target Rock
“suggests that at-will employment is inconsistent with
or detracts from an otherwise valid showing of permanent
replacement status.” Jones Plastic, 351 NLRB No. 11, at *10.
Indeed, the dissenting Board members agreed with
the majority that an employer’s “recitation of at-will
language is not fatal to its position” that it hired perma-
nent replacements. Id. at *14 n.13. Importantly, the
Board did not overrule the totality-of-the-circumstances
approach that it historically has employed to determine
whether an employer has established a “mutual under-
standing of permanence” with the replacement employ-
No. 07-3885 29
ees. Under this totality-of-the-circumstances approach,
Jones Plastic could not have fired some of the replacements
in favor of some of the strikers while denying reinstate-
ment to the remainder of the strikers on the ground that
the replacements were permanent. Plainly, such conduct
would constitute nearly incontrovertible evidence that
the replacements—despite their label as “permanent”—
were not in fact permanent. Thus, contrary to the dis-
senting Board members’ view and the Union’s argument,
Jones Plastic has not kept all of its options open.
Indeed, there were additional checks, as a practical
matter, on Jones Plastic’s options. Had it engaged in such
conduct, Jones Plastic would have risked a promissory
fraud or breach of contract lawsuit brought by the dis-
charged replacements under Tennessee law. Based on
Jones Plastic’s representations to the replacement em-
ployees that they were permanent employees in relation
to the strikers whom they were being hired to replace,
these discharged permanent employees would have
been free, see Belknap, 463 U.S. at 503, to argue to a state
court that Jones Plastic was liable under state law for
firing them in favor of the returning strikers. See, e.g.,
Hudson v. Insteel Indus., Inc., 5 Fed. App’x 378, 386 (6th
Cir. 2001) (unpublished) (noting that, “Tennessee’s
employment-at-will doctrine notwithstanding, a promis-
sory fraud claim may go forward, in the absence of an
employment contract, where ‘an employer makes an
offer of long-term, permanent employment with no
present intention of keeping its promises’ ” (quoting Lee
v. Hippodrome Oldsmobile, Inc., 1997 WL 629951, at *2 (Tenn.
Ct. App. Oct. 14, 1997))). Additionally, had the replace-
30 No. 07-3885
ment employees been discharged in favor of the returning
strikers, the replacements would have had an arguable
claim for breach of contract.8 We conclude, accordingly,
that Jones Plastic’s offer of permanent employment did not
allow Jones Plastic to keep all of its options open. We
emphasize, nevertheless, our determination earlier in
this opinion that, under Belknap, an offer of employ-
ment may be considered permanent for purposes of
federal labor law without necessarily being an enforce-
able contract under state law.
The Union further contends that, under the Board’s
decision, an employer could manipulate the reinstate-
ment procedure by discharging permanent replacements
to permit the recall of selected strikers, such as those
who exhibit a lack of union fervor or who have greater
skills or work ethic. We agree with the Union that it
8
The document that the replacement employees signed when
they accepted employment with Jones Plastic stated: “I [name of
replacement employee] hereby accept employment with Jones
Plastic . . . as a permanent replacement for [name of striker] who
is presently on strike against Jones Plastic. I understand that my
employment with Jones Plastic may be terminated by myself
or by Jones Plastic at any time, with or without cause.” Jones
Plastic & Eng’g Co. & United Steel Workers, 351 NLRB No. 11, *4
(Sept. 27, 2007). One possible interpretation of this language is
that the statement of permanence contained in this form is an
exception to the at-will language and therefore creates an
enforceable contract that Jones Plastic will not discharge the
replacement employee in favor of a returning striker. See
infra note 10.
No. 07-3885 31
would be problematic if an employer could manipulate
the reinstatement process to discriminate against employ-
ees who demonstrate a greater affinity for a union. How-
ever, the premise upon which this argument is based—that
the Board’s decision sanctions such conduct—is unsound.
An employer who discharges ostensibly permanent
replacements in favor of strikers who are less enthusiastic
about the union would commit an unfair labor practice
under section 8(a)(3) of the NLRA. NLRB v. Mackay Radio
& Tel. Co., 304 U.S. 333, 346-47 (1938); Aqua-Chem., Inc.
v. NLRB, 910 F.2d 1487, 1489 (7th Cir. 1990). In Mackay
Radio, the Supreme Court held unequivocally that an
employer who refuses to reinstate strikers on the basis
of their activity in a union violates the NLRA. Mackay
Radio, 304 U.S. at 346-47.
The Union also submits that the Board’s decision con-
travenes the Act because it allows employers to discharge
ostensibly permanent replacements in favor of formerly
striking employees who have greater skills or work ethic.
As we have explained, a union would be free to argue,
under the Board’s totality-of-the-circumstances approach,
that an employer’s discharging of select employees in favor
of formerly striking employees with greater skills may well
constitute evidence that the putatively permanent employ-
ees were not actually permanent. Furthermore, an em-
ployer who engaged in such conduct might subject itself to
contract liability in the state courts; this potential liability
may serve as a check on an employer’s ability to pursue
this course. In any event, there are no allegations that Jones
Plastic engaged in this sort of manipulation here, and the
NLRB is the appropriate institutional actor to address this
32 No. 07-3885
issue in the first instance, should it arise. As the Supreme
Court has reminded us:
[I]n many . . . contexts of labor policy, the ultimate
problem is the balancing of the conflicting legitimate
interests. The function of striking that balance to
effectuate national labor policy is often a difficult and
delicate responsibility, which the Congress com-
mitted primarily to the National Labor Relations
Board, subject to limited judicial review.
NLRB v. Kentucky River Cmty. Care, Inc., 532 U.S. 706, 725
n.5 (2001) (internal quotation marks, citations and alter-
ations omitted).
4.
Finally, the Union concedes that at-will employment can
be harmonized with federal labor law’s standard of
permanence; it petitions, however, for a rule requiring
that employers expressly advise employees that they
cannot be discharged to make way for returning strikers
but that they otherwise are employed on an at-will basis.
The Union proposes the following language: “I understand
that my employment with [the employer] may be termi-
nated by myself or [the employer], at any time, with or
without cause, for any reason other than to permit the
return of a striker unless the return of such striker is
required by a strike settlement agreement reached be-
tween [the employer] and [the union] or by order of the
[NLRB].” Reply Br. at 16-17.
No. 07-3885 33
The Supreme Court repeatedly has emphasized that “the
NLRB has the primary responsibility for developing and
applying national labor policy.” NLRB v. Curtin Matheson
Scientific, Inc., 494 U.S. 775, 786 (1990) (noting that the
NLRB “must have authority to formulate rules to fill the
interstices of the broad statutory provisions” with which
“Congress entrusted” it); see also Holly Farms Corp. v. NLRB,
517 U.S. 392, 398-99 (1996). Consequently, when the NLRA
is “ ‘silent or ambiguous’ with respect to the issues in-
volved, the NLRB’s interpretation of what obligations
the parties have under the NLRA will be affirmed if it is
‘based on a permissible construction’ ” of that statute. Prod.
Workers Union v. NLRB, 161 F.3d 1047, 1050 (7th Cir. 1998)
(quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984)). Under these circumstances,
the Board’s legal conclusions shall be upheld if they are not
“irrational or inconsistent with the Act.” NLRB v. Fin.
Inst. Employees, 475 U.S. 192, 202 (1986).
The NLRA does not define what constitutes a perma-
nent striker replacement; it does not delineate what
evidence may be used to establish that an employee is
permanent; and it is silent as to how offers of permanent
employment interact with at-will employment, a ubiqui-
tous, if not uniform, mode of employment. Under these
circumstances, we must uphold the Board’s legal conclu-
sions on how best to proceed unless its conclusions are
“irrational or inconsistent” with the NLRA. Fin. Inst.
Employees, 475 U.S. at 202. Under this standard of review,
we cannot accept the Union’s contention that the Board
should have adopted a rule requiring that employers
34 No. 07-3885
expressly advise employees that they cannot be dis-
charged to make way for returning strikers but that they
otherwise are employed on an at-will basis. Indeed, the
Board spoke directly to this issue and determined that
such a proposal would not be a satisfactory way of dealing
with situations arising in this area. The Board did note
that the language that the Union proposed “would
support a finding of permanent replacement status,” but
it also pointed out that it has “eschewed a requirement
that specific language be used to establish the required
mutual understanding of ‘permanent’ employee status.”
Jones Plastic, 351 NLRB No. 11, at *9 n.9. The Board’s
determination that a totality-of-the-circumstances ap-
proach is preferable to a rigid formulation is certainly
worthy of our deference. As the Board’s treatment of the
issue in this case also underlines, the approach suggested
by the Union would also have the effect of implying that,
in order to be considered permanent, an employee must
have a contract of employment that guarantees perma-
nency, a requirement that the Board consistently has
refused to require as a matter of federal labor policy.9 In
short, the Board’s conclusions are not unreasonable
or inconsistent with the NLRA.
9
Jones Plastic, 351 NLRB No. 11, at *9 n.9 (United Steel’s
proposed rule “would make the determination of permanent
replacement status dependent on whether an enforceable
contract was formed under State law. The requirements for
formation of such a contract will necessarily vary from one
state to another, whereas the Board is charged with fashioning
a uniform labor policy.”).
No. 07-3885 35
C. Substantial Evidence
As we already have noted, the Board acted well within
its authority in determining that the question of whether
a replacement employee should be considered “perma-
nent” in the context of ascertaining the rights of workers
returning from an economic strike should be governed
by a totality-of-the-circumstances test. Applying that test
in this case, the Board interpreted the form signed by the
replacement employees and concluded that the document
evinced a mutual understanding of permanence between
the replacement employees and the employer. The Board’s
construction of the document is a reasonable one, and
therefore it is entitled to our deference. NLRB v. Champion
Labs, Inc., 99 F.3d 223, 227 (7th Cir. 1996) (noting that, “in
analyzing [the Board’s] application of law to particular
facts,” this court defers to the Board’s inferences and the
legal conclusions that it draws from those facts); Augusta
Bakery, 957 F.2d at 1474 (“Where two inferences can be
drawn . . . it is within the Board’s province to determine
which is appropriate.”); see also Brandeis Mach. & Supply
Co. v. NLRB, 412 F.3d 822, 829 (7th Cir. 2005). Notably,
the Board’s construction of the form is consistent with
well-established interpretative principles.1 0
10
Cf. Edwin W. Patterson, The Interpretation and Construction of
Contracts, 64 Columb. L. Rev. 833, 854-55 (1964) (“If one of those
provisions is general enough to include the specific situation to
which the other is confined, the specific provision will be
deemed to qualify the more general one, that is, to state an
exception to it.”); see also Townsend v. Little, 109 U.S. 504, 511
(continued...)
36 No. 07-3885
Faithful to the totality of circumstances approach that it
historically has used, the Board did not rely simply on its
interpretation of Jones Plastic’s hiring form. Additionally,
it evaluated the other circumstances in the case and
determined that this evidence also favored a determination
of permanence. Jones Plastic’s human resources manager
had told one replacement that he was a permanent em-
ployee, and Jones Plastic presented evidence that at least
three of the striker replacements had considered them-
selves permanent employees in relation to the strikers. In
all of its communications with the Union, moreover, Jones
Plastic consistently had maintained that the replacement
employees were permanent. The at-will disclaimer in the
form, clearly the most significant piece of evidence that
might have supported a contrary determination, was
construed reasonably by the Board as not allowing Jones
Plastic to terminate the replacements in favor of the
returning strikers.
Given the totality of the circumstances, therefore, the
Board reasonably concluded that Jones Plastic had a
10
(...continued)
(1883) (“[G]eneral and specific provisions, in apparent contra-
diction . . . and without regard to priority of enactment, may
subsist together, the specific qualifying and supplying excep-
tions to the general.”); Farnham v. Windle, 918 F.2d 47, 49 (7th
Cir. 1990) (“[W]here there are two statutory provisions, one of
which is general and designed to apply generally, and the other
is specific and relates to only one subject, the specific provision
must prevail and must be treated as exception [sic] to the
general provision.” (internal quotation marks and citation
omitted)).
No. 07-3885 37
mutual understanding of permanence with the replace-
ment employees, despite the replacements’ otherwise at-
will status. Accordingly, the Board properly concluded
that Jones Plastic had proffered a legitimate and substan-
tial business justification for refusing to discharge the
replacement employees at the end of the strike to make
way for the formerly striking employees. See Fleetwood
Trailer Co., 389 U.S. at 378.
Conclusion
Because the determination of the Board has a reasonable
basis in law and is supported by substantial evidence,
the petition for review is denied.
P ETITION FOR R EVIEW D ENIED
W OOD , Circuit Judge, concurring in the judgment. The
Union may not realize it upon its first reading of the
majority’s opinion, but it has in fact won the war even if
it lost the battle over what happened at Jones Plastic and
Engineering Company (the Company). My concern
over the majority’s opinion is that portions of it might be
read to endorse more of the Board’s legal approach in
this case than I believe it actually has done. I thus write to
summarize what I believe we are holding, and why I am
38 No. 07-3885
concurring in the ultimate judgment to deny the Union’s
petition for review.
The question before the Board, succinctly put, was
whether the workers that Jones Plastic hired during the
Union’s economic strike were permanent or temporary. If
they were permanent, then under well-established rules,
the Company was under no obligation to release them
when the Union made its unconditional offer to return
the striking employees to work. See Mackay Radio & Tel.
Co. v. NLRB, 304 U.S. 333, 345-46 (1938). If the replace-
ments were temporary, then the employer cannot demon-
strate the “legitimate and substantial business justifica-
tions” for refusing to reinstate the strikers that is neces-
sary to avoid a finding of an unfair labor practice. See
NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378 (1967),
quoting NLRB v. Great Dane Trailers, 388 U.S. 26, 34 (1967).
In this case, the Board had to decide how to apply these
rules to a reinstatement offer that promised only employ-
ment at will and that emphasized that the replacement’s
“employment with Jones Plastic may be terminated by
[the replacement] or by Jones Plastic at any time, with or
without cause.” See ante, at 3.
Both the Union and the two dissenting members of the
Board are concerned that an offer like this one erases the
distinction between a permanent and a temporary re-
placement. As the dissenters put it, the Jones Plastic offer
“created a situation in which ‘the replacement could be
fired at the will of the employer for any reason; the em-
ployer would violate no promise made to a replacement
if it discharged some of them to make way for returning
No. 07-3885 39
strikers.’ ” Jones Plastic & Eng’g Co. & United Steel Workers,
351 NLRB No. 11, at *10 (Sept. 27, 2007). The Union argues
that such open-ended discretion on the part of the Com-
pany would allow it to discharge just enough replace-
ment workers to create job openings for striking workers
who had become disenchanted with the Union or who
promised to oppose further unionization efforts. It points
out that the classic definition of employment “at will” is
an arrangement under which “absent express agreement
to the contrary, either employer or employee may termi-
nate their relationship at any time, for any reason. . . . Such
employment relationship is one which has no specific
duration, and such a relationship may be terminated at
will by either the employer or the employee, for or without
cause.” See B LACK’S L AW D ICTIONARY at 525 (6th ed. 1990).
Although there are some narrow limitations on the em-
ployer’s discretion—for example, Illinois recognizes an
exception for cases in which an at-will employee is fired
because he reported dangerous or illegal activities at
work, see Robinson v. Alter Barge Line, Inc., 513 F.3d 668, 671
(7th Cir. 2008), and at-will employees may state claims for
racial discrimination in employment under 42 U.S.C.
§ 1981, see Walker v. Abbott Laboratories, 340 F.3d 471, 476
(7th Cir. 2003)—this case presents the question whether a
company is entitled to exercise its discretion to fire an at-
will employee solely because it wants to bring back
strikers in the absence of a formal settlement or order
from the Board. In my view, the majority has answered
that question “no,” for the reasons I outline below.
First, the majority reaffirms the rule that the burden of
proving that a replacement worker is permanent lies on the
40 No. 07-3885
employer. Ante, at 15. Second, it accepts the Board’s
“totality of the circumstances” approach to the deter-
mination whether a position is permanent or temporary.
Ante, at 16. Third, just as both the majority and dissenting
members of the Board did, the majority holds that it is
possible for an at-will employee to be a permanent replace-
ment: under all the circumstances, some will be, and some
will not be. Finally, and critically, the majority rules that:
[T]he Board consistently has allowed employers to
hire permanent employees while concomitantly impos-
ing certain conditions on their retention, so long as there
is a mutual understanding that the employer’s desire to
reinstate a striker will not cause the replacement employee’s
discharge.
Ante, at 25-26 (emphasis added). The language in italics is
conceptually identical to the rule for which the Union
argued here. As the majority notes, ante, at 13 n.1, the
Union took the position that the following language
would address its concerns:
I understand that my employment with [the
employer] may be terminated by myself or [the
employer], at any time, with or without cause, for
any reason other than to permit the return of a striker
unless the return of such striker is required by a
strike settlement agreement reached between [the
employer] and [the union] or by order of the [NLRB].
The Board majority rejected the Union’s solution, saying
that it was not prepared to require “specific language” of
any type. In my view, that is not what the Union was
No. 07-3885 41
requesting; it was saying only that the idea conveyed in the
language it suggested had to be communicated to the
replacement workers, and it was offering one verbal
formulation that would do the job. The majority is
willing to accept the Board’s argument that the Union’s
suggestion was “too complicated,” ante at 13 and 33, but
I do not. No matter—as the Board itself recognized, the
precise language is not the point: it is the concept that
must be communicated to the replacement worker. The
majority suggests that “[o]ne possible interpretation of [the
Jones Plastic form] is that the statement of permanence
contained in this form is an exception to the at-will lan-
guage and therefore creates an enforceable contract that
Jones Plastic will not discharge the replacement employee
in favor of a returning striker.” Ante, at 30 n.8. I agree with
them that this is “one possible interpretation.” Moreover,
reading the majority’s opinion as a whole, I conclude
that it is the necessary interpretation. That is the only
approach that is consistent with the majority’s observa-
tion that “[u]nder [the] totality-of-the circumstances
approach, Jones Plastic could not have fired some of the
replacements in favor of some of the strikers while denying
reinstatement to the remainder of the strikers on the
ground that the replacements were permanent.” Ante,
at 29.
In the end, therefore, the majority has placed an impor-
tant gloss on the decision of the Board majority. That gloss
is exactly what the Union requested, as a matter of law.
Before a replacement worker who was hired as an em-
ployee at will can be characterized as “permanent,” and
thus before an employer may refuse to release the
42 No. 07-3885
worker when the economic strikers make an uncondi-
tional offer to return to work, the company must somehow
make it clear that the employer’s normal discretion to
fire the at-will replacement employee is constrained: it
may not fire the at-will worker just to create a position
for a returning striker, unless that action is required either
by a strike settlement agreement or by an order of the
Board.
All that remains is the question how to apply these
rules. The majority rightly notes that the court must
defer to the Board’s factual determinations. One of those
determinations is the question whether, under the
totality of the circumstances, the Jones Plastic replacement
workers were permanent or temporary. The Board major-
ity’s opinion does not spell out the limitations on the
employer’s discretion with respect to at-will employees
as well as the majority’s opinion does. But, on these
facts and bearing in mind the applicable standard of
review, it is possible to find that the Company satisfied
its burden of proof. I therefore concur in the judgment.
9-15-08