International Brothe v. NLRB ( 2009 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
INTERNATIONAL BROTHERHOOD OF 
ELECTRICAL WORKERS, LOCAL 21
AFL-CIO,
Petitioner, No. 07-72750

v. NLRB No.
NATIONAL LABOR RELATIONS 33-CA-14450
BOARD, OPINION
Respondent,
LUCENT TECHNOLOGIES INC.,
Respondent-Intervenor.

On Petition for Review of an Order of the
National Labor Relations Board
Argued and Submitted
February 11, 2009—San Francisco, California
Filed April 20, 2009
Before: Ronald M. Gould, Jay S. Bybee, and
Timothy M. Tymkovich,* Circuit Judges.
Opinion by Judge Gould
*The Honorable Timothy M. Tymkovich, Circuit Judge for the Tenth
Circuit Court of Appeals, sitting by designation.
4537
4540 IBEW v. NLRB
COUNSEL
Gilbert A. Cornfield, Cornfield and Feldman, Chicago, Illi-
nois, for the petitioner.
Robert J. Englehart and Daniel A. Blitz, National Labor Rela-
tions Board, Washington, DC, for the respondent.
Michael F. McGahan and Donald Krueger, Epstein Becker &
Green, P.C., New York, New York; Joseph D. Miller, Epstein
Becker & Green, P.C., San Francisco, California, for the
intervenor.
OPINION
GOULD, Circuit Judge:
I
Lucent Technologies (“Lucent”) purchased AG Communi-
cations Systems (“AG”) and decided to merge Lucent with
AG. International Brotherhood of Electrical Workers, Local
21, AFL-CIO (“Local 21”), which represented the AG tele-
phone equipment installers before the merger, filed charges
with the National Labor Relations Board (“the Board”)
against Lucent for failure to bargain regarding Lucent’s
merger with AG. The ALJ dismissed the complaint but the
Board reversed, holding that Lucent was exempted from bar-
gaining over the decision to merge, but should have bargained
with Local 21 over the effects of the merger. However, the
Board decided not to impose retroactive bargaining or back
pay and the remedy given was a cease and desist order and
notice-posting requirement. Thinking the remedy inadequate,
Local 21 petitions for review, and we deny the petition.
II
Lucent is engaged in the manufacture, installation, and sale
of telecommunications equipment and services. AG is a joint
IBEW v. NLRB 4541
venture created by Lucent’s predecessor and a predecessor of
Verizon Communications, and is engaged in substantially the
same telecommunications business as Lucent. The joint ven-
ture agreement required Lucent to purchase 100% of AG
stock by December 31, 2003. By 2000, Lucent owned about
90% of AG stock, and on February 3, 2003, Lucent purchased
the remainder and owned AG in its entirety.
After purchasing AG, Lucent began to merge AG into
Lucent to streamline operations and to increase efficiency and
profitability. Before the merger, the approximately 250 AG
telephone equipment installers were represented by Local 21
and the approximately 2,700 Lucent telephone equipment
installers were represented by Communications Workers of
America (“CWA”). After the final purchase of AG stock,
Lucent developed a plan to integrate AG and Lucent installers
into a single bargaining unit to be represented by CWA.
By April 1, 2003, most departments of AG were merged
into Lucent; Lucent management gained control of operations
and many AG employees became Lucent employees. This
overall merger included the gradual integration of the AG
installers into Lucent, but it was not until July 17, 2003 that
Lucent notified Local 21 that as of August 1, 2003, the AG
installers’ bargaining unit would be merged into the Lucent
bargaining unit—and that the merged unit would be repre-
sented exclusively by CWA and covered by the Lucent-CWA
collective bargaining agreement.
On July 21, Local 21 requested bargaining over the effects
of the merger, but neither AG nor Lucent responded. On
August 1, the bargaining units were completely merged into
a single unit represented by CWA. At that time, Lucent
entered into negotiations with CWA regarding the effects of
the merger on the installers. As a result, former AG installers
remained employed with full pay and benefits, and received
seniority credit for their work at AG.
4542 IBEW v. NLRB
On October 22, 2003, Local 21 filed an unfair labor prac-
tice charge with the Board, alleging that AG and Lucent vio-
lated the National Labor Relations Act (“NLRA”) by failing
to negotiate over the decision to merge and the effects of that
decision. In 2004, the Board’s General Counsel issued a com-
plaint against AG and Lucent echoing Local 21’s allegations.
After hearings, the ALJ decided that as of August 1, 2003,
when the bargaining units were completely merged, neither
Lucent nor the shell of AG owed Local 21 a duty to bargain;
rather, any bargaining obligations were owed to CWA exclu-
sively. The ALJ dismissed the complaint in its entirety.
Both Local 21 and the Board’s General Counsel filed
exceptions to the ALJ’s decision. The exceptions generally
contended that the ALJ erred by not finding that AG and
Lucent constituted a single employer prior to August 1, 2003,
and erred by not finding any violation of the duty to bargain.
The Board held that (1) Lucent and AG were in fact a “sin-
gle employer” as early as April 1, 2003; (2) Lucent was
exempted from bargaining over the decision to merge the
companies, including the bargaining units, because the merger
was a core business decision under First National Mainte-
nance Corp. v. NLRB, 452 U.S. 666 (1981), and was not pri-
marily motivated by labor costs; (3) Lucent had a duty to
bargain with Local 21 over the effects of the merger on for-
mer Local 21 installers; and (4) despite that duty, a remedy
under Transmarine Navigation Corp., 170 NLRB 389 (1968),
forcing retroactive effects bargaining and awarding back pay,
was not warranted. The Board held such a remedy inappropri-
ate in this case largely because the former Local 21 members
became represented by CWA, and CWA adequately repre-
sented the interests of those installers on the effects of the
merger. Dissenting Board Member Walsh agreed that bargain-
ing over the decision to merge was not required, but would
have granted a Transmarine remedy to Local 21 on the
effects-bargaining claim. Local 21 did not file a motion with
the Board to reconsider any of its findings or holdings, but
IBEW v. NLRB 4543
instead petitioned this court for review of the Board’s deci-
sion.
III
Local 21 argues that Lucent violated the NLRA by refusing
to bargain over the decision to merge the installer bargaining
units. An employer must bargain in good faith “with respect
to wages, hours, and other terms and conditions of employ-
ment.” 29 U.S.C. § 158(a)(5), (d). When a claim is presented
to the Board, its decision on whether a violation of the statute
has occurred is “accorded considerable deference as long as
it is rational and consistent with the statute.” Local Joint
Executive Bd. of Las Vegas v. NLRB, 515 F.3d 942, 945 (9th
Cir. 2008) (internal quotation marks omitted). The Board’s
findings of fact must be taken as conclusive if they are sup-
ported by “substantial evidence.” 29 U.S.C. § 160(e).
[1] In First National, the Supreme Court held that a compa-
ny’s decision to halt work at a particular branch and lay off
workers was not subject to bargaining because it was a core
business decision; it was primarily about the economics of
running the business, not about terms and conditions of
employment. First Nat’l, 452 U.S. at 686. The Court reasoned
that when a company makes a core business decision that is
not driven primarily by labor issues, it is unlikely that man-
dating bargaining with a union would be productive. Id. at
681-82. The Court concluded that “management must be free
from the constraints of the bargaining process to the extent
essential for the running of a profitable business” and that bar-
gaining over the business decision itself should only be man-
dated “if the benefit, for labor-management relations and the
collective-bargaining process, outweighs the burden placed on
the conduct of the business.” Id. at 678-79.
[2] Here, the issue is whether Lucent’s decision to merge
with AG, including the bargaining units, was a core business
decision or whether it was instead a decision made primarily
4544 IBEW v. NLRB
to reduce labor costs. We agree with the Board that the
merger decision here was the kind of core business decision
about which bargaining is not mandatory under First
National. Lucent paid $20 million to purchase Verizon’s
remaining shares in AG, and then proceeded to integrate
almost all operations—including sales, finance, human
resources, IT, and security—in order to eliminate redundan-
cies and streamline operations. The real estate and assets of
the companies were also merged. The Board explicitly found
that the integration decision was not driven by a desire to
reduce telephone equipment installer labor costs and held
unanimously that bargaining was not required for the core
business decision to merge. Because the Board’s factual find-
ing that the merger decision was based primarily on consider-
ations other than labor costs is supported by “substantial
evidence,” we must take that finding as conclusive. 29 U.S.C.
§ 160(e). We conclude that the burden placed on the conduct
of the business by forcing bargaining in this case would out-
weigh any potential benefit to the bargaining process, and that
Lucent’s decision to merge was exempt from bargaining. See
First Nat’l, 452 U.S. at 679.1
IV
[3] The parties do not dispute that under First National,
even if Lucent was exempted from bargaining over the
1
Local 21 now argues, for the first time on appeal, that the decision to
merge was actually motivated by labor costs. However, an argument not
raised to the Board, either in the exceptions or in a motion for reconsidera-
tion of the Board’s decision, is likely waived. See 29 U.S.C. § 160(e)-(f)
(“[N]o objection that has not been urged before the Board . . . shall be con-
sidered by the Court” except in “extraordinary circumstances.”); Woelke
& Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982); NLRB
v. Sambo’s Rest., Inc., 641 F.2d 794, 795-96 (9th Cir. 1981). However, we
need not rest our decision on Local 21’s waiver of that argument because
the Board’s finding that the merger was not motivated by labor costs is
supported by substantial evidence, and is therefore conclusive. 29 U.S.C.
§ 160(e).
IBEW v. NLRB 4545
merger decision itself, Lucent nonetheless was required to
bargain with Local 21 about the effects of the merger. See id.
at 681-82. However, Local 21 argued in its briefing that the
Board erred by not granting a full Transmarine remedy,
including retroactive effects bargaining and back pay.2
[4] “The Board’s order will not be disturbed unless it can
be shown that the order is a patent attempt to achieve ends
other than those which can fairly be said to effectuate the pol-
icies of the Act.” Fibreboard Paper Prods. Corp. v. NLRB,
379 U.S. 203, 216 (1964) (internal quotation marks and cita-
tion omitted). The Board’s choice of remedy is only set aside
by this court for “clear abuse of discretion.” Cal. Pac. Med.
Ctr. v. NLRB, 87 F.3d 304, 311 (9th Cir. 1996). For an
effects-bargaining violation, the standard remedy is known as
a Transmarine remedy, and includes back pay and an order to
bargain over the effects of the decision. Transmarine, 170
NLRB at 389-90. However, as with other remedies, the Board
still has broad discretion, and must consider the particular cir-
cumstances of the case before deciding exactly what remedy
to prescribe. See, e.g., Nat’l Terminal Baking Corp., 190
NLRB 465, 466-67 (1971).
[5] We conclude that the Board did not abuse its discretion
in determining that a full Transmarine remedy was not
required in this case. The Board provided ample reasoning in
its opinion: AG installers suffered no detriment from the fail-
ure to bargain over effects, and even if there was some detri-
2
At oral argument, counsel for Local 21 argued instead that Local 21
was entitled to a remedy under Holly Farms Corp., 311 NLRB 273(1993). However, we agree with the Board that Holly Farms is inapposite
because in that case, the integration at issue lacked a well-defined timeta-
ble at the time the company withdrew recognition from the bargaining
unit. Id. at 279. Additionally, the employees there were constructively ter-
minated, so it was sensible for the Board to award retroactive remedies.
Here, the installers maintained full employment and were represented ade-
quately by CWA. Because the Board decision and the briefing focused on
the applicability of a Transmarine remedy, we discuss that remedy here.
4546 IBEW v. NLRB
ment, that harm is outweighed by the disruption that would
likely be caused by forcing retroactive bargaining with Local
21 when all of the employees are now represented by CWA.
Even if some union members may have been harmed in some
way as a result of the merger, Local 21 bears the burden of
showing that after-the-fact bargaining over effects would
clearly fix any alleged harm, and also bears the burden of
showing that the Board clearly abused its discretion by not
ordering the Transmarine remedy.
Specifically, the Board found that: (1) “There is no conten-
tion that the terms and conditions of employment received by
the former AG installers after their integration into the CWA-
represented Lucent installer unit were in any way inferior to
the terms and conditions of employment that they had
received prior to the units’ merger”; (2) “there is no basis in
this case for effects bargaining over such topics related to loss
of employment, because the former AG installers continued to
be employed by the Respondent with full pay and benefits”
and “continued to retain union representation after their inte-
gration into the Lucent unit”; (3) Lucent “bargained with
CWA for many of the matters that would be the substance of
bargaining with IBEW Local 21” and “[a] positive outcome
for former AG installers was achieved”; and (4) back pay
would be an unwarranted windfall to the employees who
retained full employment and union representation, albeit
from CWA instead of Local 21.
We consider supported by substantial evidence and fairly
compelling the Board’s finding that former AG employees
were fully represented by CWA at the moment the merger
occurred. CWA bargained with Lucent on behalf of the for-
mer AG installers and won important concessions. To show
that the Board erred in its remedy, Local 21 must at least
establish that ordering retroactive effects bargaining with
Local 21 would have achieved more for the former AG
installers than the larger CWA union was able to achieve for
those installers. It seems more likely, as the Board reasoned,
IBEW v. NLRB 4547
that if Lucent had been forced to bargain with both CWA and
Local 21, the AG installers probably would have received
worse terms because the larger CWA likely would have been
in a better bargaining position than Local 21. Local 21 offers
nothing to rebut this conclusion.
[6] Instead, Local 21 merely lists some evidence it contends
shows that AG installers were harmed by the lack of effects
bargaining. However, Local 21 has not shown that former AG
installers were indeed in an inferior position after the merger.3
Local 21 argues that layoffs occurred before and after the
merger but does not explain the relevance of any alleged lay-
offs. Specifically, Local 21does not argue that it could have
avoided layoffs more effectively than CWA. By contrast,
Lucent points to evidence in the record that any layoffs were
in order of seniority and were based on a reduction in busi-
ness.
Local 21 also alleges generally that former AG installers
suffered reduced wages, benefits, or seniority rights after the
merger. However, Local 21 provides no support for this argu-
ment other than listing a small number of differences in the
collective bargaining agreements. Local 21 does not show that
it could have attained terms superior to those achieved by
CWA, and does not explain how any alleged differences in
the collective bargaining agreements establish clear error by
the Board.
Finally, Local 21 argues that the case should be remanded
to the ALJ for further fact finding regarding the actual effects
of the merger. However, the Board has cited substantial evi-
3
Local 21 also argues that it was unable to provide adequate evidence
of post-merger harm to union members because the ALJ held such evi-
dence irrelevant. However, the ALJ’s ruling was limited to the subject of
post-merger layoffs and the witness’s knowledge of general industry
trends; and more importantly, the ruling was in response to an objection
joined by Local 21’s counsel. There is adequate evidence in the record to
affirm the Board’s remedy.
4548 IBEW v. NLRB
dence supporting its remedy decision, and it was not clear
error for the Board to decide against remand.
[7] We agree with the Board that Lucent’s delay in notify-
ing Local 21 of the merger decision does not itself compel a
Transmarine remedy. The Board found a violation of the duty
to bargain over the effects of the merger and crafted an appro-
priate remedy; Local 21 has not alleged that any concealment
of Lucent’s decision to merge is a separate violation of the
NLRA. Lucent’s delay here does not compel the conclusion
that the Board clearly erred in crafting its remedy.
[8] The Board had legitimate reasons for limiting the rem-
edy in the way that it did, including preventing a back pay
windfall to fully employed and represented installers. In light
of the significant discretion granted to the Board in crafting
its remedies, we conclude that the Board did not abuse its dis-
cretion in this case.
The petition for review is DENIED.