Kellogg Company v. NLRB

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 16a0202p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
KELLOGG COMPANY, ┐
Petitioner/Cross-Respondent, │
│
│
v. │
> Nos. 15-2031/2183
│
NATIONAL LABOR RELATIONS BOARD. │
Respondent/Cross-Petitioner, │
│
│
BAKERY, CONFECTIONERY, TOBACCO WORKERS │
AND GRAIN MILLERS INTERNATIONAL UNION, AFL- │
CIO; BAKERY, CONFECTIONERY, TOBACCO │
WORKERS AND GRAIN MILLERS LOCAL UNION 252- │
G, │
Intervenors. │
┘
On Petition for Review and Cross-Application for
Enforcement of an Order of the National Labor Relations Board.
No. 15-CA-115259.
Argued: June 16, 2016
Decided and Filed: August 19, 2016
Before: SILER, BATCHELDER, and GIBBONS, Circuit Judges.
_________________
COUNSEL
ARGUED: David M. Buday, MILLER JOHNSON, Grand Rapids, Michigan, for
Petitioner/Cross-Respondent. Joel A. Heller, NATIONAL LABOR RELATIONS BOARD,
Washington, D.C., for Respondent/Cross-Petitioner. ON BRIEF: David M. Buday, Keith E.
Eastland, MILLER JOHNSON, Grand Rapids, Michigan, for Petitioner/Cross-Respondent. Joel
A. Heller, Kira Dellinger Vol, NATIONAL LABOR RELATIONS BOARD, Washington, D.C.,
1
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 2
for Respondent/Cross-Petitioner. Jeffrey R. Freund, Devki K. Virk, BREDHOFF & KAISER,
P.L.L.C., Washington, D.C., for Intervenors.
_________________
OPINION
_________________
JULIA SMITH GIBBONS, Circuit Judge. The Kellogg Company (Kellogg) and the
Bakery, Confectionery, Tobacco Workers and Grain Millers Local Union 252-G (the Union)
began negotiations for a successor to their Memphis Agreement, a local collective bargaining
agreement (CBA) that was to expire soon. Negotiations failed when the Union refused to
negotiate with respect to any of Kellogg’s proposed revisions. Kellogg responded by locking out
approximately 200 bargaining-unit employees. The National Labor Relations Board (the Board)
found that Kellogg’s proposal effectively modified the terms of the unexpired Master
Agreement, and therefore constituted an unlawful mid-term modification in violation of the
National Labor Relations Act (NLRA). Because we conclude that the proposal did not modify
the express terms of the Master Agreement and because Milwaukee Spring, 268 N.L.R.B. 601
(1984), disclaims the “effective modification” theory imposed by the Board in this case, we grant
the petition for review, deny the cross-application for enforcement, and vacate the Board’s
decision.
I.
The relationship between Kellogg and the Union is governed by two separate agreements:
the Master Agreement and the supplemental Memphis Agreement. The Master Agreement was
effective from September 30, 2012 through October 3, 2015 while the Memphis Agreement was
in effect from October 22, 2010 until October 20, 2013. Prior to entering into the Master
Agreement, Kellogg entered into “supplemental agreements” with the local union at each plant.
The Master Agreement applies to four of Kellogg’s plants, including the Memphis, Tennessee
plant while the Memphis Agreement is specific to the Memphis location. The Master Agreement
explicitly covers “only those matters specifically included [t]herein.” Master Agreement 1, CA6
Rawle 23. It further provides that unless the parties agree, issues covered in the Master Agreement
will not be subject to negotiation “in an effort to secure changes in or to secure a new
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 3
Supplemental Agreement” and issues covered in the supplemental agreements will not be subject
to negotiation “in an effort to secure changes in or a new version of [the Master] Agreement.”
Id. at 2.
The Master Agreement grants regular employees various benefits such as severance pay,
paid holidays, insurance benefits, and participation in a stock purchase and dividend
reinvestment plan. The Master Agreement does not distinguish between regular and non-regular
employees except for one reference in the Wage Appendix, which governs “[a]ll matters
pertaining to hourly wages,” id. at 33, and establishes a rate of $6.00 per hour less than “job rate
. . . for all work performed by non-regular employees, such as temporary and casual employees.”
Id. at 66–67 (emphasis added). This is the only reference to non-regular employees or casual
employees in the Master Agreement.
The Memphis Agreement, however, distinguishes between regular and casual employees.
Section 107 of the Memphis Agreement defines the purpose of the “casual program” as
“provid[ing] regular employees with relief from extended work schedules through the use of
Casual employees.” Memphis Agreement 8, CA6 Rawle 23. Except in limited circumstances,
casual employees under the Memphis Agreement would only be “used after overtime has been
offered to regular employees” and generally could not be used when regular employees were on
layoff. Id. at 8–9. The number of casual employees was also capped at 30% of the total number
of regular employees. And though casual employees were offered some “fringe benefits” such
as lunch, breaks, and other benefits provided in the Master Agreement’s Wage Appendix, they
were otherwise not subject to the terms and conditions of the Master Agreement or Memphis
Agreement.
On September 17, 2013, Kellogg and the Union began negotiations for a successor to the
Memphis Agreement. The negotiations came to a standstill over Kellogg’s proposed
modifications to the casual program. Under Kellogg’s proposal, the casual program would no
longer serve simply to provide scheduling relief to regular employees, but would “include any
employees hired by Kellogg to perform production or any other bargaining unit work covered
by” the Memphis Agreement. Kellogg’s Last/Best Offer 4, CA6 Rawle 23. Moreover, casual
employees would no longer “be limited in the scope of their work, duties, tasks, hours, or in any
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 4
other terms or conditions of employment” and could “be employed on an indefinite basis,”
giving Kellogg unrestricted “rights to hire, use, manage, or direct Casual employees.” Id.
Casual employees would also be granted new rights, such as seniority rights, access to a
grievance procedure, participation in the job bidding process, and priority in the event that
Kellogg established an alternative crewing schedule. The Union steadfastly refused to negotiate
with Kellogg concerning these proposals. For instance, when Kellogg’s representative pressed
the Union for alternative solutions to its proposals, the Union representative replied, “No—I
don’t have to do that. I know you are really nice but I don’t mind telling you no every time.”
2013 Memphis Suppl. Negotiations 23, Sept. 17, 2013, CA6 Rawle 23. Insisting that Kellogg was
attempting to bargain for amendments to the Master Agreement, rather than the Memphis
Agreement, the Union representative finally concluded negotiations stating, “we are done
negotiating, we are done . . . done forever.” 2013 Memphis Suppl. Negotiations 1, Oct. 15,
2013, CA6 Rawle 23.
After the parties reached impasse,1 Kellogg sent the Union its “Last/Best Offer” dated
October 16, 2013, threatening to lock out all Memphis bargaining unit employees effective
October 22, 2013, if the Union declined to accept its offer by 7:00 a.m. on that date. When the
Union did not respond, Kellogg locked out approximately 200 of its bargaining-unit employees.
The Union filed a complaint on March 27, 2014, and the ALJ held a trial on the alleged
unfair labor practice charges. The ALJ noted that the Master Agreement covers little about
casual employees, but that supplemental agreements “have determined the scope and operation
of the casual employee program at the[] respective plants.” Decision 23, CA6 Rawle 23. Therefore,
the ALJ concluded that Kellogg’s proposals did not contravene the terms of the Master
Agreement, but rather spoke to the provisions of the Memphis Agreement, so the proposals were
not mid-term modifications of the Master Agreement, but rather mandatory subjects of
bargaining. He further determined that a bona fide impasse was reached between the parties due
to the Union’s failure to negotiate the proposals, so Kellogg was entitled to impose a lockout.
1
Neither party disputes that impasse was reached.
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 5
The Board reversed the ALJ’s decision. It concluded that the ALJ “misperceived the
impact” of Kellogg’s proposals, which was to permit Kellogg “to cease hiring all regular
employees in the future and replace them with lower paid ‘casual’ employees.” Decision and
Order 5, CA6 Rawle 23 (emphasis added). Kellogg repeatedly sought analogous modifications to
regular employees’ wages and benefits during the 2005, 2009, and 2012 negotiations of the
Master Agreement, but the parties never accepted these changes. In essence, the Board
determined, Kellogg “sought to retain all of the traditional attributes of regular employees that
benefit it the most . . . while instituting across-the-board cuts to the wages and benefits that were
bargained for newly hired regular employees in the Master Agreement.” Id. The proposal would
modify the definition of casuals to encompass basically any new hire. Thus, the Board opined,
while the Master Agreement made clear that the parties intended that the “core work force of
permanent full-time employees” receive the benefits negotiated for regular employees, Kellogg’s
proposals “effectively alter the Master Agreement’s wage rates and benefits for newly hired
regular employees.” Id. at 5–6 (emphasis added). The Board noted that a proposal to modify the
Master Agreement mid-term is non-mandatory, and thus cannot be insisted upon as a condition
for reaching an agreement for mandatory subjects. It further observed that a lockout is
permissible only if undertaken in support of a legitimate bargaining position. As a result, the
Board concluded, Kellogg’s attempt to compel acceptance of a mid-term modification of the
Master Agreement by threatening to lockout, then locking out its employees violated Sections
8(a)(1), (3), and (5) of the NLRA.
Kellogg petitioned this court for review and the Board filed a cross-application for
enforcement of its order.
II.
We review for substantial evidence the Board’s factual determinations and its application
of law to facts. NLRB v. Galicks, Inc., 671 F.3d 602, 607 (6th Cir. 2012). This standard will be
met “if a reasonable mind might accept the evidence as ‘adequate to support a conclusion.’”
NLRB v. Int’l Bhd. of Elec. Workers, 514 F.3d 646, 649 (6th Cir. 2008) (quoting Vanguard Fire
& Supply Co. v. NLRB, 468 F.3d 952, 957 (6th Cir. 2006)). We review the Board’s
interpretation of contract terms de novo. NLRB v. Local 334, Laborers Int’l Union of N.A.,
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 6
481 F.3d 875, 879 (6th Cir. 2007). Though we also review de novo the Board’s legal
conclusions that are unrelated to the NLRA, Montague v. NLRB, 698 F.3d 307, 314 (6th Cir.
2012), we must defer to the Board’s reasonable interpretations of the NLRA, giving respect to
the Board’s judgment as long as it is “reasonably defensible,” Int’l Bhd. of Elec. Workers, 514
F.3d at 650 (quoting Vanguard, 468 F.3d at 957). We need not agree that the Board’s
construction is the “best way” to read the NLRA, but rather leave it to the Board to balance
“conflicting legitimate interests in pursuit of the national policy of promoting labor peace
through strengthened collective bargaining.” Montague, 698 F.3d at 314 (citation omitted)
(internal quotation marks omitted); accord Litton Fin. Printing Div. v. NLRB, 501 U.S. 190,
201–02 (1991). However, this court must not stand back and “rubber-stamp” Board decisions
that controvert the NLRA; instead it must carefully scrutinize accusations that the Board failed to
abide by precedent. Vokas Provision Co. v. NLRB, 796 F.2d 864, 869 (6th Cir. 1986) (citation
omitted). This principle notwithstanding, the Board may depart from its precedent if its
departure is explained and “explicitly and rationally justified.” Kindred Nursing Ctrs. v. NLRB,
727 F.3d 552, 560 (6th Cir. 2013) (citation omitted); accord Atchison, Topeka & Santa Fe Ry.
Co. v. Wichita Bd. of Trade, 412 U.S. 800, 808 (1973) (“Whatever the ground for the departure
from prior norms, however, it must be clearly set forth so that the reviewing court may
understand the basis of the agency’s action and so may judge the consistency of that action with
the agency’s mandate.”) If the basis for the departure is adequately explained, the standard of
review is whether the Board decision was “arbitrary and capricious.” Kindred Nursing, 727 F.3d
at 560.
III.
Section 8(d) of the NLRA imposes a mutual obligation on both employers and unions to
“confer in good faith with respect to wages, hours, and other terms and conditions of
employment.” 29 U.S.C. § 158(d). However, no such duty exists if “any modification of the
terms and conditions contained in a contract for a fixed period . . . is to become effective before
such terms and conditions can be reopened under the provisions of the contract.” Id. Thus, a
modification pertaining to a provision in a contract that has yet to expire, a mid-term
modification, is not one about which the parties have a duty to bargain. See id.; NLRB v.
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 7
Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349 (1958); Smurfit-Stone Container Enters.,
357 N.L.R.B. 1732, 1733 (2011) (“But absent a reopener provision covering the proposal, under
Section 8(d) of the Act the other party is under no obligation to consent to the [mid-term]
modification or even to discuss it.”). Insistence on such a subject of bargaining violates the
NLRA. Smurfit-Stone Container Enters., 357 N.L.R.B at 1733. Prohibiting forced bargaining
on mid-term modifications furthers the NLRA’s policy of reducing “industrial strife” and helps
maintain stability in the terms and conditions of employment agreed upon by the parties.
Chesapeake Plywood, Inc., 294 N.L.R.B 201, 201 (1989). A party’s insistence on a mid-term
modification to the point of impasse—the “point at which the parties have exhausted the
prospects of concluding an agreement and further discussions would be fruitless,” Pleasantview
Nursing Home, Inc. v. NLRB, 351 F.3d 747, 761–62 (6th Cir. 2003) (citation omitted)—violates
the NLRA. Smurfit-Stone Container Enters., 357 N.L.R.B at 1733. So does locking out
employees for refusing to negotiate a mid-term modification. See Horsehead Res. Dev. Co. v.
NLRB, 154 F.3d 328, 344 (6th Cir. 1998) (“A lockout can . . . be unlawful if it is implemented
out of hostility to the process of collective bargaining.” (citing Am. Ship Bldg. Co. v. NLRB, 380
U.S. 300, 309 (1965))); Rangaire Acquisition Corp., 309 N.L.R.B 1043, 1050 (1992)
(concluding that the NLRA prohibits a lockout to “coerce [employees] into consenting to
reopening and agreeing to modify the terms and conditions of the existing collective-bargaining
contract”).
A.
Kellogg contends that the Board reached its conclusion by “inferring a contractual work
guarantee for regular employees that simply does not exist.” Pet’r Br. 3, CA6 R. 22. This, it
argues, is contrary to the language of the Master Agreement, which expressly prohibits the use of
implied terms, and further “includes no express guarantees or ‘core work force’ terms governing
the allocation of work between casual and regular employees.” Id. at 3–4, 18–21. The only
provision in the Master Agreement pertaining to casual employees, Kellogg asserts, is unaffected
by its proposal.
The Board responds that Kellogg’s proposal “would modify the unexpired Master
Agreement’s [express] provisions regarding wages, benefits, overtime, and premium pay” and
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 8
would further “erase the Master Agreement’s distinction between ‘regular’ and ‘non-
regular’/‘casual’ employees.” Resp’t Br. 16, 27, CA6 R. 27. It asserts that because the Master
Agreement did not define “casual employees,” the definition carries its ordinary meaning, which
is “short term, temporary, sporadic employees.” Id. at 25 & n.7.
We interpret a CBA as a contract, looking first to its plain language “for clear
manifestations of the parties’ intent.” Moore v. Menasha Corp., 690 F.3d 444, 451 (6th Cir.
2012). To the extent we find the plain language ambiguous, we may look outside of the
document to determine the parties’ intent by examining “relevant extrinsic evidence, such as a
past practice of the parties in regard to the effectuation or implementation of the contract
provision in question, or the bargaining history of the provision itself.” Mining Specialists, Inc.,
314 N.L.R.B. 268, 268–69 (1994); accord Moore, 690 F.3d at 451.
The Master Agreement covers “only those matters specifically included [t]herein.”
Master Agreement 1, CA6 Rawle 23. The only reference to casual employees specifically included
therein pertains to the wage rate for casual employees and the Board does not contest that
Kellogg’s proposal does not affect this provision. The Master Agreement has no “system” of
regular and casual employees. See Resp’t Br. 21, CA6 R. 27. It is the Memphis Agreement,
regarding which both parties were required to negotiate, that defines casual employees and sets
forth the terms of the casual program. As the Master Agreement does not distinguish between
regular and casual employees aside from the limited purpose of wages, the Board is incorrect that
the proposal erases the Master Agreement’s distinction between the two, as there is no such
distinction to erase. The provisions pertaining to regular employees in the Master Agreement are
untouched by the proposal.
The Board also makes much of the definition of casual employees, but casual employees
were never defined in the Master Agreement. The definition was included in the Memphis
Agreement’s description of the casual program. Likewise, though the Board complains that
under the proposal, Kellogg could hire new casual employees while regular employees were in
layoff, the obligation imposed on Kellogg not to do so is one placed on it by the Memphis
Agreement, not the Master Agreement.
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 9
In looking to the plain, unambiguous language of the Master Agreement and the
proposal, the latter simply does not modify the former so we need not look outside of the text of
either writing. Thus, the success of the Board’s argument turns on the viability of its effective
modification theory.
B.
Kellogg next argues that the Board’s decision conflicts with its precedent in Milwaukee
Spring. According to Kellogg, Milwaukee Spring stands for the proposition that, in determining
whether there has been a modification, the Board must identify a specific term contained in the
contract and is not permitted to find “an implied work preservation term ‘based on wage and
benefits or recognition provisions’ in an unexpired contract.” Pet’r Br. 4, 31–32, CA6 R. 22.
Thus, it concludes, there can be no effective modification under Section 8(d).
While the Board concedes that the Master Agreement does not guarantee regular
employees any “minimum hours of work, overtime, or particular schedules,” it contends that the
proposal not to hire any regular employees would effectively terminate any provisions for newly
hired regular employees. Resp’t Br. 26–27, CA6 R. 27. The Board also insists that Milwaukee
Spring “simply held that no term in the parties’ single contract had been modified, effectively or
otherwise,” but that subsequent cases approved of an effective modification theory. Id. at 30.
To resolve this issue, we first turn to Milwaukee Spring. We note, though, that the Board
did not mention or discuss Milwaukee Spring in its decision.
The employer in Milwaukee Spring asked the union to forgo a scheduled wage increase
or, alternatively, to relocate the union’s operations to a nonunionized facility so that the
employer could obtain relief from the comparatively higher labor costs at the unionized
Milwaukee Spring facility. 268 N.L.R.B. at 601. Though the union rejected these proposals, the
employer nevertheless relocated work to the nonunionized facility. Id. Applying the principles
underlying Section 8, the Board concluded that “before the Board may hold that Respondent
violated Section 8(d), the Board first must identify a specific term ‘contained in’ the contract that
the Company’s decision to relocate modified.” Id. at 602. No such provision was contained in
the contract. Id. Though the union argued that because the relocation decision was motivated by
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 10
a desire for lower labor costs, it modified the contract’s “wage and benefits provisions,” the
Board rejected this argument. Id. It concluded that if the parties had wanted to draft a provision
requiring that work remain at the Milwaukee Spring facility, they could have, but did not. Id.
The Board concluded that it was not its role “to create an implied work-preservation clause in
every American labor agreement based on wage and benefits or recognition provisions,” and
“expressly decline[d] to do so.” Id. To hold otherwise, the Board observed, would “add[] to the
collective-bargaining agreement terms not agreed to by the parties and foreclose[] the exercise of
rational economic discussion and decision-making which ultimately accrue to the benefit of all
parties.” Id. at 603.
Subsequent decisions likewise require that the Board find a specific term in the contract
that is modified by the proposal and prohibit the Board from implying a work preservation term
based on “wage and benefits provisions” in an agreement. See, e.g., FMC Corp, 290 N.L.R.B.
483, 484–85 (1988) (relying on Milwaukee Spring in concluding that “there [was] no evidence
that the parties’ contract contained a provision which restricted or otherwise preserved the
performance of the [bargaining-unit] work to the [unionized] facility,” so the employer did not
engage in an unlawful mid-term modification); Ad-Art, Inc., 290 N.L.R.B. 590, 607–08 (1988)
(concluding that Milwaukee Spring was inapplicable because the contract at issue “contained
express provisions prohibiting the reassignment or transfer of work without the Unions’
consent”). For instance, in Suburban Transit Corp., the employer transferred work from one set
of employees, employed by Transit, to another, employed by Trails, despite the union’s rejection
of the proposal. 276 N.L.R.B. 15, 18 (1985). Prior to the Board’s decision in Milwaukee Spring,
the ALJ concluded that the employer violated the NLRA because it “attempted to accomplish
indirectly what it could not legally do directly—the modification of the terms of the Transit
employees’ existing contract.” Id. However, on remand for reconsideration in light of
Milwaukee Spring, the ALJ issued a supplemental decision, which the Board adopted. Id. at 15.
On remand, the union argued that its case was distinguishable from Milwaukee Spring because
the contract contained a “work-preservation clause,” which purportedly preserved the work they
had historically done and guaranteed 90 full-time Transit employees would be maintained. Id. at
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 11
24.2 Yet, the ALJ concluded that this provision was “nothing more than [the employer’s]
‘intention’ to maintain a minimum of 90 drivers,” which did not guarantee Transit drivers “the
right to perform any specific type of work.” Id. The ALJ also rejected the union’s argument that
the provision that “[p]art time drivers will be used only when there is an insufficient number of
full time drivers to cover all of the available work,” constituted an “‘express guarantee’ . . . that
the full-time Transit employees would be ensured of work prior to the employment of part-time
(Trails) drivers.” Id. at 25.
Many of the cases relied on by the Board on appeal include an express term that was
directly, not effectively, modified by the employer’s proposal, and thus are inapplicable to the
Board’s effective modification theory. E.g., St. Vincent Hosp., 320 N.L.R.B. 42, 42–45 (1995)
(concluding that the employer violated the NLRA by making a mid-term modification
concerning a healthcare plan that was “contained in” the CBA after the parties, by “mutual
consent” orally added the healthcare plan to the CBA); E.G. & G. Rocky Flats, Inc.,
314 N.L.R.B. 489, 493, 497 (1994) (concluding that the employer violated the NLRA by
temporarily suspending a training program that was added by agreement of the parties to the
CBA); Link Corp., 288 N.L.R.B. No. 132, 1988 WL 213934, at *2 (1988) (“[T]he Respondent
unilaterally modified the terms of article XXXIII of the agreement by ceasing to make required
premium payments and thereby effectively terminating all employee group insurance benefits set
forth in that article.” (emphasis added)); Martin Marietta Energy Sys., 283 N.L.R.B. 173, 174–75
2
The provision stated:
Suburban shall have the right to hire part time drivers.
It is the Company’s intention to maintain at least the current level of 90 full time drivers,
provided that the current level of business continues. The Company further intends to
enlarge the full time work force.
Part time drivers will be used only when there is an insufficient number of full time drivers to
cover all of the available work. In all cases the full time drivers shall have their choice
between line and charter work provided that there are part time drivers available to cover
all open line work. In all cases full time drivers shall have their choice of the biggest paying
pieces of work. The Company will also attempt to satisfy full time regular run operators in
the assignment of extra work, providing sufficient operators are available to cover all open
work.
The limit of work available to full time drivers will be governed only by the “hours of
service” regulations of the Department of Transportation, and not by the availability of part
time drivers.
Id. (emphasis added).
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 12
(1987) (concluding that the employer unlawfully modified the CBA mid-term by adding a new
health insurance plan because, although the employees were free to continue in “the negotiated
medical insurance plan,” the CBA provided that there could be “no ‘additions, waivers,
deletions, changes or amendments (to the contract) . . . except by mutual consent in writing”
(alteration in original)); C & S Indus., Inc., 158 N.L.R.B. 454, 458–59 (1966) (concluding that
the employer committed an unlawful mid-term modification in initiating a wage incentive system
where there was a term in the contract prohibiting any change in the method of payment).
The remaining cases cited by the Board are likewise inapposite. The Union, in its
intervenor’s brief, points to Don Lee Distributor, Inc. v. NLRB, 145 F.3d 834, 843–44 (6th Cir.
1998), where this court held that there were no “magic words” distinguishing between an
unlawful bargaining pact or innocent coordination, but looked to the “totality of the
circumstances” to “determine whether the signatories truly” were independent, or whether they
“effective[ly]” had veto power. Intervenor Br. 38–39, CA6 R. 29. But Don Lee did not deal
with the issue presented here of whether the terms of a party’s proposal modified the terms of an
unexpired CBA. Rather, the inquiry in Don Lee was whether the employers refused to bargain
separately by creating an unlawful multiemployer bargaining relationship, which necessarily
required an inquiry into the employers’ conduct. 145 F.3d at 842–43. Likewise, in Stroehmann
Bakeries, Inc., the Board held that when the employer prohibited regular drivers from selling
certain products, it acted contrary to the CBA, which guaranteed all regular drivers a set
commission for deliveries of all bakery products. 287 N.L.R.B. 17, 19 (1987). In that case, the
employer established a new route, at a lower pay than under the CBA, for deliveries only of
cakes. Id. However, the CBA established a base pay rate for “all” drivers and a rate for
“[c]ommission on all sales.” Id. It also required “drivers to receive full pay and commission on
all bakery products delivered in his territory” and required “[a]ll bakery products sold . . . [to] be
delivered by a regular wholesale sales driver and paid for in accordance with the
[aforementioned] wage scale.” Id. “A more thorough and conscientious effort to set the
compensation,” the Board concluded “can hardly be imagined by the mind of man.” Id. Such a
conscientious effort was lacking in the Master Agreement.
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 13
In sum, the cases relied upon by the Board on appeal do nothing to rebut the principles
articulated in Milwaukee Spring. Turning to the facts of this case, the Board’s position is
inconsistent with these principles for several reasons. For one, as discussed above, there is no
specific term in the Master Agreement modified by Kellogg’s proposal. Moreover, Milwaukee
Spring and the cases interpreting it disclaim any effective modification theory. A comparison of
the facts of this case to Suburban Transit illustrates the inapplicability of the Board’s theory. As
the ALJ found to be the case in Suburban Transit, the Union argued Kellogg “attempted to
accomplish indirectly what it could not legally do directly—the modification of the terms of the”
unexpired Master Agreement. See 276 N.L.R.B. at 18. But in Suburban Transit, the employer’s
actions were not in violation of the NLRA. This was true even though that CBA had a term
requiring part-time drivers to be used only when there was an insufficient number of full-time
drivers—a term like that contained in the expired Memphis Agreement, but not in the unexpired
Master Agreement—and a term stating the employer’s intention to maintain a set number of full-
time drivers—a term neither contained in the Memphis Agreement nor in the Master Agreement.
See id. at 24. Surely, if, as in Suburban Transit and Milwaukee Spring, an employer can reassign
work away from a class of employees, it can decline to hire a class of employees in the future
while maintaining the benefits available to those presently employed.
It may be true, as the Board contends, that these principles allow Kellogg to use “creative
semantics” to negotiate for terms in the Memphis Agreement that the Union declined to accept in
the negotiations for the Master Agreement. Yet, as illustrated by Board precedent, this is
acceptable. It is for the Board, not this court, to balance “conflicting legitimate interests in
pursuit of the national policy of promoting labor peace through strengthened collective
bargaining.” Montague, 698 F.3d at 314 (citation omitted) (internal quotation marks omitted). If
the Union wanted to provide for a “core work force of permanent full-time employees,” see
Decision and Order 5, CA 6 Rawle 23, to work at Kellogg and provide them with a set amount of
work, the Union could have bargained for terms to that effect in the Master Agreement, but it did
not. To the contrary, it refused to bargain. Because Kellogg’s proposal is not a mid-term
modification of the Master Agreement, Kellogg’s insistence upon its terms to the point of
impasse, and subsequent lockout, did not violate the NLRA. Though the Board in this case
concluded to the contrary, it did so without citation to any of its prior precedents, let alone
Nos. 15-2031/2183 Kellogg Co. v. NLRB, et al. Page 14
Milwaukee Spring. Thus, although the Board argues here that Milwaukee Spring was
distinguishable and gave no explanation of why Milwaukee Spring did not apply, Milwaukee
Spring obviously did apply, and the Board was required to consider and explain its departure
from that precedent.
Although we defer to the Board’s interpretations of the NLRA if “reasonably defensible,”
Int’l Bhd. of Elec. Workers, 514 F.3d at 650, it is this court’s duty not to merely “rubber-stamp”
the Board’s conclusion, but to carefully scrutinize whether it abided by its own precedent, Vokas,
796 F.2d at 869. Here, the Board did not abide by its precedent or explain its failure to do so.
IV.
For the aforementioned reasons, we grant the petition for review, deny the cross-
application for enforcement, and vacate the Board’s decision.