Local 65-B, Graphic Communicat v. NLRB ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-4045
L OCAL 65-B, G RAPHIC C OMMUNICATIONS C ONFERENCE
OF THE INTERNATIONAL B ROTHERHOOD OF T EAMSTERS,
Petitioner,
v.
N ATIONAL L ABOR R ELATIONS B OARD ,
Respondent,
and
Q UBECOR W ORLD M T. M ORRIS II, LLC,
Intervenor.
On Petition for Review of an Order of the
National Labor Relations Board
A RGUED M AY 28, 2009—D ECIDED JULY 10, 2009
Before B AUER, F LAUM, and K ANNE, Circuit Judges.
F LAUM, Circuit Judge. Local 65-B, Graphic Communica-
tions Conference of the International Brotherhood of
Teamsters, a collective bargaining representative for
2 No. 08-4045
some of the employees at a commercial printing plant
in Mt. Morris, Illinois, brought an unfair labor practices
charge against Quebecor World Mt. Morris II, LLC, the
plant’s owner. The union alleged that the plant’s manage-
ment had imposed a new employee disciplinary system,
and demoted one employee under that system, without
first negotiating that change in working conditions with
the union. The substance of that charge turns on the
validity of a management rights provision in the par-
ties’ previous collective bargaining agreement; if the
agreement with the management rights clause was ex-
tended (the company’s position) then management had
the authority to change certain working conditions with-
out negotiating with the union first. If the old collective
bargaining agreement was not extended but, instead,
had expired when the company put the new system in
place (the union’s position) then the management rights
clause was no longer in effect and, consequently, man-
agement could not have made any changes to working
conditions without negotiating first.
The validity of the management rights provision, in
turn, depends on whether the company and the union
agreed orally to extend the old collective bargaining
agreement during their negotiations. The Administrative
Law Judge assigned to the case initially concluded that
the parties had not agreed to extend the old agreement;
the National Labor Relations Board reversed that deter-
mination and dismissed a portion of the union’s com-
plaint. The union now petitions for review.
For the following reasons, we find that the Board’s
conclusion that the parties agreed to extend the
No. 08-4045 3
contract, including the management rights clause, is
supported by substantial evidence and we deny the
petition for review.
I. Background
Quebecor World Mt. Morris II, LLC (“the company”),
owns and operates a large commercial printing plant in
Mt. Morris, Illinois. Local 65-B of the Graphic Communica-
tions Conference of the International Brotherhood
of Teamsters (“the union”) is the bargaining representative
for 275 employees in the company’s finishing department,
and has been their representative since approximately
1918.
The last collective bargaining agreement that the com-
pany and the union entered into prior to the present
litigation expired on March 31, 2006. In March 2006,
consequently, various representatives from the company
and the union sat down to negotiate a new agreement
in a joint bargaining session sometime prior to March 31
(the exact date is unimportant, but the union says the
exchange took place on March 31, while the NLRB claims
that it could have happened on March 30). At any rate,
the company’s representatives brought up the idea of
setting forth a written extension of the current contract,
which would last until the parties had reached an agree-
ment on a new CBA. One of the union’s representatives,
Dave Strohecker, testified about that discussion in the
hearing before the ALJ (he offered the testimony when
examined by counsel for the union):
4 No. 08-4045
Q: Mr. Strohecker, with respect to the status of the
expired agreement were you present when there
was a discussion between Mr. Roberts [a union
negotiatior] and Mr. McCarthy [a company negotia-
tor]?
A: Yes, I was.
Q: And what was that discussion about?
A: About the expiration of the agreement.
Q: And what date—or when did that take place?
A: It was either the day before or the day of the expira-
tion.
Q: And in what context did it take place?
A: We were in a contract bargaining meeting.
Q: Okay. And Mr. Mc—
A: McCarthy.
Q: McCarthy. What did Mr. McCarthy say, and what
did Mr. Roberts say?
***
A: Mr. McCarthy asked if we were going to sign a
written extension. And—because he said that it
was their intention to work under our current agree-
ment. And Mr. Roberts said that we didn’t see any
need for a written extension. That it was our intention,
too, to just work under the current agreement. And
Mr. McCarthy said he was okay with that. That was
the extent of the conversation.
No. 08-4045 5
Ron Slade, an employee in the company’s human resources
department, also testified that the parties agreed orally
to extend the existing contract. Here is his testimony
from the hearing:
Q: Did he [Roberts] say to your recollection that the
parties would agree to—that the Union would agree
to work under the terms of the old contract?
A: Yes.
Q: Did he say anything more than that?
A: Tom, we’ve been negotiating for a long time.
I can’t—I can’t recall. There’s been a lot of things said.
But I confirmed honestly the conclusion.
At least at the time that the NLRB issued its opinion
below, the two sides had still not come to an agreement on
a new collective bargaining agreement. The old collective
bargaining agreement contained a number of terms,
including a management rights clause in Article IV of the
CBA, stating that:
Except as limited by the express provisions of this
Agreement, the Company shall have the exclusive
right to manage the plant and to direct the working
forces including, but not limited to, the right to
direct, plan and control plant operations; to assign
employees; to establish and change work schedules;
to hire, recall, transfer, promote, demote, suspend,
discipline or discharge for cause; to layoff employees
because of lack of work or other legitimate reasons;
to establish and apply reasonable standards of perfor-
mance and rules of conduct . . .
6 No. 08-4045
The central dispute in this case is whether or not that
clause remained in effect after the collective bargaining
agreement nominally expired on March 31, 2006. If the
parties orally agreed to extend the CBA, as the company
and the NLRB claim, then the CBA—together with all of
its ancillary clauses—remained in effect during the
course of the negotiations. The union contends, however,
that they did not agree to extend the CBA but were
simply stating their intention to work under certain
terms of the agreement that, under the NLRA, the em-
ployer could not change during the negotiation process.1
This difference matters because the company later took
disciplinary action against one employee, Robert Gigous,
and did so by means of a seemingly new procedure. On
September 7, 2006, two supervisors met with Gigous
and told him they were placing him on a “90 Shift Per-
formance Improvement Plan” for unsatisfactory per-
formance. The Administrative Law Judge found that
Gigous was the first bargaining unit employee subject
to “90 Shift Performance Improvement Plan.” Previously,
the company had addressed unsatisfactory performance
through a progressive discipline policy stepping up from
a verbal warning, a written warning, administrative
1
Under NLRB v. Katz, 369 U.S. 736 (1962), an employer’s
unilateral changes to certain bargaining subjects, such as
wages, hours, and working conditions, during the time of
negotiations can constitute an unfair labor practice. Id. at 747-48.
The union contends that its intention was simply to accept
this default position, and keep in place those terms from the
old CBA that, legally, the employer could not change.
No. 08-4045 7
suspension, actual suspension, and then, assuming none
of the above had worked, termination. The company
implemented the new performance improvement plan
without winning the union’s agreement to it in any of
the ongoing negotiation sessions.
The next day, Strohecker wrote to Slade objecting to
the plan, and requesting additional information about
it. The union then filed a step one grievance on Septem-
ber 11, 2006 and put the grievance in writing the next day.
The grievance did not proceed any further than that
because the company and the union never held a step
two grievance meeting. Gigous was subsequently
demoted, pursuant to the performance plan, on Feb-
ruary 26, 2007.
The union filed an unfair labor practices charge with
the NLRB on March 1, 2007 and amended the charge on
May 30, 2007. The parties held an evidentiary hearing
before an ALJ on September 17, 2007 and the ALJ issued
factual findings and a recommended order finding that
the company violated § 8(a)(5) and (1) of the NLRA by
unilaterally implementing the performance improve-
ment plan as a disciplinary measure and changing the
working conditions of employees, demoting Gigous
under the plan, and not providing the union with infor-
mation about the plan and Gigous’ demotion.
There are conflicting statements in the hearing transcript
about the theory of the case brought by the Board’s General
Counsel. At one point, in the opening statement, the
general counsel stated that, “The evidence will show
that they’ve agreed to work under the terms of the last
8 No. 08-4045
agreement.” The ALJ then asked, “Oral extension?” The
general counsel responded, “Yes.” Later, however, the
general counsel for the NLRB and the ALJ had an ex-
change which seems to demonstrate a different theory.
The general counsel stated that, “My understanding and
would think our evidence would be that the parties
have continued to work under the terms [of the expired
CBA], which I believe is somewhat different than an oral
extension.” The ALJ responded, “Oh, I understand that.”
Ultimately, with respect to the issue of the extension
of the then-existing collective bargaining agreement,
the ALJ found that,
Undisputed testimony establishes that, at a bargaining
session shortly before the expiration of the prior
agreement, Company spokesperson David McCarthy
asked if the Union was going to “sign a written exten-
sion.” Union spokesperson Phil Roberts replied that
he did not “see any need for a written extension,” that
it was the Union’s intention to continue to “work
under the current agreement.” McCarthy replied
that he was “okay with that.” There was no written
extension of the collective bargaining agreement.
A two-member panel of the NLRB later reversed the
ALJ’s finding that the company committed an unfair
labor practice by unilaterally implementing the perfor-
mance improvement plan. The Board found that while
the parties had not entered into a written extension of
the terms of the contract, they had agreed to an oral
extension in Roberts and McCarthy’s exchange during
the negotiating session. As the Board concluded:
No. 08-4045 9
On or about March 31, 2006, the date that the parties’
most recent collective-bargaining agreement was set
to expire, the chief negotiators for the Respondent
and the Union orally agreed, without qualification, to
extend the collective-bargaining agreement while
they negotiated a successor contract. It is undisputed
that at all relevant times in this case, the parties under-
stood that they were operating under the terms of
the expired contract, as extended.
Because the oral extension of the contract would have
extended the management rights clause, the company
was within its rights to implement the performance
improvement plan and demote Gigous. The union now
appeals from the NLRB’s decision.
II. Discussion
The issue before us in this appeal is whether substantial
evidence supports the Board’s determination that the
parties agreed to extend the previous collective
bargaining agreement, including the management rights
clause. We apply a deferential standard of review to
rulings from the NLRB. SCA Tissue North America LLC v.
NLRB, 371 F.3d 983, 987 (7th Cir. 2004). We review its
factual findings for substantial evidence and its legal
conclusions for a reasonable basis in law. Sears, Roebuck &
Co. v. NLRB, 349 F.3d 493, 502 (7th Cir. 2003). Substantial
evidence means “such relevant evidence as a reasonable
mind might accept as adequate to support the con-
clusion of the Board.” Huck Store Fixture Co. v. NLRB, 327
F.3d 528, 533 (7th Cir. 2003). Under the substantial evi-
10 No. 08-4045
dence test, a reviewing court may not “displace the
Board’s choice between two fairly conflicting views, even
though the court would justifiably have made a different
choice had the matter been before it de novo.” Universal
Camera v. NLRB, 340 U.S. 474, 488 (1951). However,
“When the Board purports to be engaged in simple
factfinding, unconstrained by substantive presumptions
or evidentiary rules of exclusion, it is not free to
prescribe what inferences from the evidence it will
accept and reject, but must draw all those inferences
that the evidence fairly demands. ‘Substantial evidence’
review exists precisely to ensure that the Board achieves
minimal compliance with this obligation, which is the
foundation of all honest and legitimate adjudication.”
Allentown Mack Sales and Service, Inc. v. NLRB, 522 U.S.
359, 378-79 (1998). The NLRB is of course free to
adopt findings of fact and conclusions of law different
from the ALJ’s conclusions, but its decision must still
conform with the substantial evidence standard. “[O]n
matters which the [ALJ], having heard the evidence
and seen the witnesses, is best qualified to decide, the
agency should be reluctant to disturb his findings
unless error is clearly shown.” Universal Camera, 340 U.S.
at 494. When we review the NLRB’s decision, “the
ALJ’s decision (including his findings of fact) is as
much a part of the record as the evidence put before
the ALJ, and we must consider the ALJ’s views in
deciding whether the Board’s order is supported by
substantial evidence.” Slusher v. NLRB, 432 F.3d 715, 727
(7th Cir. 2005).
The core question in this appeal is whether substantial
evidence supported the Board’s determination that the
No. 08-4045 11
parties orally agreed to extend the contract, along with
the crucial management rights clause. If the parties
did not agree to extend the contract past its expiration
date but instead only agreed to keep in place those
terms that the NLRA required them to keep in place
during the negotiations, then the company’s imposition
of a new disciplinary scheme was an unfair labor prac-
tice. The NLRB has previously determined that, “A con-
tractual reservation of managerial discretion . . . does not
survive expiration of the contract that contains it, absent
evidence that the parties intended it to survive.” In re
Guard Publishing Co., 339 NLRB 353, 355 (2003). If such
a clause is not in effect, then changes to working condi-
tions are mandatory bargaining subjects under § 8(d) of
the NLRA. The employer cannot make any changes to
those conditions without bargaining with the employees’
representative. See, e.g., Litton Financial Printing Div. v.
NLRB, 501 U.S. 190, 198 (1991).
The union claims that the Board, in concluding that the
parties agreed to extend the collective bargaining agree-
ment, reversed a credibility determination of the ALJ
and did so without analyzing the record to identify a
clear error on the part of the ALJ. The Board presents us
with the preliminary question of whether the union is
barred from making this argument because they did not
raise it before the Board. § 10(e) of the NLRA bars us
from considering arguments that the party petitioning
for review did not raise before the Board. The Board now
argues that the ALJ’s decision rejected the company’s
contention that the management rights clause remained
in effect because the ALJ found that the companies had not
12 No. 08-4045
entered into a formal, written extension of the contract.
The union should have sought review of that finding
and argued before them that the parties did not agree
orally to extend the CBA. As they failed to raise that
objection to the Board, according to this argument, it is
now waived.
The union contends that their position has always been
that the parties did not agree to extend the collective
bargaining agreement past March 31 and that the Board
was on notice about the arguments that they are now
making. We have ruled on similar jurisdictional claims
before, albeit not recently. § 10(e) and its implementing
regulations do require a party to file an exception to
any objectionable factual or legal determination of an
ALJ. See 29 C.F.R. § 102.46(b)(1). In Barton Brands, Ltd. v.
NLRB, 529 F.2d 793 (7th Cir. 1976), however, we held
that a party petitioning for reviewing of the NLRB’s
decision to reverse the ALJ need not always file an ex-
ception, since the factual findings of the ALJ were
before the Board and it is presumably the reversal of
those factual findings that the petitioner is now objecting
to. Id. at 801.
It is true that the union, if it wanted to cover all its
bases, might have argued that the ALJ should have
found that the parties not only did not enter into a
written agreement to extend the contract but did not
enter an oral agreement to do so, either. The ALJ did not
make an adverse finding to the union on that point,
however. They would have had no need to file an excep-
tion on that point. The Board also argues that the union
No. 08-4045 13
should have petitioned the Board for reconsideration
of its decision. We have held that a petition for recon-
sideration is not required under § 10(e), however. U.S.
Marine Corp. v. NLRB, 944 F.2d 1305, 1319 n. 17 (7th Cir.
1991).
We proceed, then, to the merits of the argument. The
union claims that the NLRB reversed a critical factual
finding of the ALJ and did so without finding further
support in the record. The union frames the ALJ’s
finding that, “[t]here was no written extension of the
collective bargaining agreement” as a credibility determi-
nation based on the testimony presented to the ALJ.
The union has good reasons for casting the ALJ’s deci-
sion as a credibility determination, as we have
previously said that “any of the ALJ’s findings that turn
on express or implied credibility determinations take
on particular significance on review.” Slusher, 432 F.3d at
727. However, a credibility determination is a decision
about whether or not to believe testimony in the first
place or which witness to believe when testimony con-
flicts. Id. (assessing motive requires credibility deter-
minations about witnesses); see also United States v. Wil-
liams, 553 F.3d 1073, 1080 (7th Cir. 2009) (discussing
credibility determination). But the difference between
the ALJ’s opinion and the Board’s opinion was not a
decision to credit different pieces of testimony. The ALJ
and the Board simply disagree about what conclusion to
14 No. 08-4045
draw from the same piece of testimony.2 The evidence
in the record about the extension of the contract is rather
thin; both sides cite the testimony of Dave Strohecker
as supporting their view of the case. The ALJ and the
Board both took that testimony at face value, they
simply reached different conclusions about what it meant.
Second, what testimony there is provides equal support
to both the Board’s and the ALJ’s view of the case.
Strohecker’s testimony was surprisingly ambiguous
about just what the parties agreed to. One could reach
the same conclusion as the ALJ, and decide that when
Roberts said he “didn’t see any need for a written exten-
sion” he was turning down the company’s offer to extend
the contract. Or one could use that same testimony to
support the Board’s determination that since he did not
see any need for a written extension and that it “was our
intention, too, to just work under the current agreement”
that the union was accepting the company’s proposal
and did not see the need to negotiate a formal written
extension of the old collective bargaining agreement.
(While Strohecker’s testimony was second-hand, his
2
The Board’s opinion cited Strohecker’s testimony in footnote
six of its opinion, in support of its finding that “On or about
March 31, 2006, the date that the parties’ most recent collective-
bargaining agreement was set to expire, the chief negotiators
for the Respondent and the Union orally agreed, without
qualification, to extend the collective-bargaining agreement
while they negotiated a successor contract.” The ALJ, of course,
cited the same piece of testimony when discussing the same
issue.
No. 08-4045 15
statement that it “was our intention, too” can reasonably
be viewed as endorsing the company’s basic proposal.)
This is a close question, but the Board’s conclusion is not
one that we can reverse under the substantial evidence
standard. Rather than being a credibility determina-
tion, this case turns on competing inferences. While
Strohecker’s testimony may give rise to several equally
valid interpretations, the NLRB’s is supported by the
record and is at the very least a rational conclusion
based on the testimony (even if the conclusion is not,
as they claimed in their opinion, undisputed).
The union objects that the NLRB should not have over-
turned the ALJ’s conclusions without citing further
evidence in the record. There is, however, additional
testimony in the record from Strohecker that the manage-
ment rights provision was in effect during the negotia-
tion period.3 That bolsters the Board’s conclusion that
3
The relevant testimony follows.
Q: (By Mr. Haman) And so then I take it the grievance
procedure and the management rights provision of Respon-
dent’s No. 1 has been in effect for all times covered by
the chart and the grievance?
A: Correct.
Counsel for the union objected that the question called for a
legal conclusion, although the ALJ disagreed. The question
was also compound, since it asks about the grievance
procedure and the management rights provision. But Strohecker
also said, in response to a similar question about the grievance
(continued...)
16 No. 08-4045
the parties agreed to extend the CBA. Moreover, the only
other witness to testify at the hearing, Ron Slade, also
claimed that the parties agreed to extend the CBA, al-
though his testimony was more conclusory than
Strohecker’s.
The union also raises two additional arguments for
reversing the Board’s decision. First, they claim that the
Board overruled, without explanation, two cases in
which it held that an agreement to work under certain
terms of a contract was not in itself an agreement to
extend the entire contract. In S.W. Motor Lines, Inc., 236
NLRB 938 (1978), the Board determined that, when there
was conflicting testimony about whether the parties
decided to extend a contract and the only written agree-
ment concerned the retroactive application of benefits,
there was no agreement to extend the contract but only
to extend certain terms of it. In Cardinal Operating
Company, 246 NLRB 279 (1979) the Board determined
that an employer’s statement that it intended to abide
by its obligations under an expiring collective
bargaining agreement was not an effective extension of
all of the terms of that agreement. The union contends
that this case is very much in line with those previous
two cases and that the NLRB has effectively overruled
them sub silentio.
3
(...continued)
procedure and management rights provision, “[w]ell, we’re
working under this agreement” referring to the old collective
bargaining agreement, which presumably would include
both provisions.
No. 08-4045 17
The Board first contends that the union has waived this
argument by not presenting it as an exception to the ALJ’s
finding or in a motion to reconsider, but the argument is
even weaker here than it was with respect to the first
argument. The union obviously had no way of knowing
that the Board would (in their view) overrule its
precedent prior to the final decision. The argument,
accordingly, does not appear to have been waived.
The cases cited by the union are distinguishable on their
facts. In both S.W. Motor Lines and Cardinal Operating
Company the Board determined that the parties had not
agreed to an extension of the collective bargaining agree-
ment. The present case, however, is not one where the
parties agreed to extend certain terms and not others
but rather one where they agreed to extend the entire
CBA. Insofar as those two cases appear to stand for a
different legal principle—namely that an agreement to
extend some terms of a collective bargaining agreement
is not an agreement to extend all the terms, and that
both parties must agree to an extension for it to be enforce-
able—the Board was not inconsistent with its
prior precedent, and its legal conclusion was reasonable.
The union finally argues that the Board’s decision is
inconsistent with the Supreme Court’s decision in Metro-
politan Edison Co. v. NLRB, 460 U.S. 693 (1984). In Metropoli-
tan Edison the Court held that a union’s waiver of its
statutory rights (including the right to bargain over
changes to working conditions) must be “explicitly stated”
and “clear and unmistakable.” Id. at 708. The union
argues that the waiver in this case was neither of those
18 No. 08-4045
things. Even if we were to accept the testimony before
the ALJ as evidence of an extension of the previous collec-
tive bargaining agreement, there was no discussion
about key contractual provisions (such as arbitration,
wages, hours, disciplinary action, etc.) and thus no
explicit waiver of the union’s statutory rights.
No one disputes that the management rights provision
of the previous contract was a valid waiver of the
union’s statutory rights, however. An agreement to
extend that prior collective bargaining agreement was a
clear and unmistakable waiver of those same rights, since
the union’s negotiators could be fairly charged with
knowledge of the prior agreement and the consequences
of extending that agreement. If the NLRB’s key fact
finding is correct, then, their decision is consistent with
Metropolitan Edison.
III. Conclusion
For the foregoing reasons, we D ISMISS the petition for
review.
7-10-09