Minteq International, Inc. v. NLRB

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 20, 2017 Decided April 28, 2017
No. 16-1276
MINTEQ INTERNATIONAL, INC. AND SPECIALTY MINERALS
INC., WHOLLY OWNED SUBSIDIARIES OF MINERAL
TECHNOLOGIES, INC.,
PETITIONERS
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
INTERNATIONAL UNION OF OPERATING ENGINEERS,
LOCAL 150, AFL-CIO,
INTERVENOR
Consolidated with 16-1335
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Maurice Baskin argued the cause for petitioners. With him
on the briefs were A. John Harper III, Jonathan O. Levine, and
Adam P. Tuzzo.
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Eric Weitz, Attorney, National Labor Relations Board,
argued the cause for respondent. With him on the brief were
John H. Ferguson, Associate General Counsel, Linda Dreeben,
Deputy Associate General Counsel, and Robert J. Englehart,
Supervisory Attorney.
Charles R. Kiser argued the cause and filed the brief for
intervenor. Brian Powers entered an appearance.
Before: GARLAND, Chief Judge, GRIFFITH, Circuit Judge,
and SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
SENTELLE.
SENTELLE, Senior Circuit Judge: In 2012, employer-
petitioner Minteq International, Inc. began requiring new
employees to sign a Non-Compete and Confidentiality
Agreement. The National Labor Relations Board found that
Minteq violated section 8(a)(1) and (5) of the Fair Labor
Standards Act by failing to afford the employees’ union notice
or an opportunity to bargain over Minteq’s unilateral
implementation of the requirement that employees sign the
agreement. We deny Minteq’s petition for review and enforce
the Board’s Order.
I.
Minteq International, Inc. (“Minteq”) sells the application
of its proprietary refractory materials for the walls of furnaces
used in the steel-making process, among other things. In 2012,
Minteq’s employees were represented by the International
Union of Operating Engineers, Local 150, AFL-CIO and
covered by a collective bargaining agreement (“CBA”). The
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relevant CBA contained a management rights provision stating
in part:
Except as expressly modified or restricted by a
specific provision of this Agreement, all
statutory and inherent managerial rights,
prerogatives, and functions are retained and
vested exclusively in the Company, including,
but not limited to, the rights: . . . to control and
regulate the use of machinery, facilities,
equipment, and other property of the Company;
to introduce new or improved research,
production, service, distribution, and
maintenance methods, materials, machinery,
and equipment; to issue, amend and revise work
rules and Standards of Conduct, discipline
steps, policies and practices; and to take
whatever action is either necessary or advisable
to manage and fulfill the mission of the
Company and to direct the Company’s
employees.
The CBA also states:
An employee who has never accrued seniority
under this Agreement or an employee rehired
shall be in “probationary” status until
completion of six (6) months of
employment. . . . The discipline, layoff or
discharge of an employee who is in
probationary status shall not be a violation of
this Agreement.
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Pursuant to the CBA, Minteq can discharge or discipline
probationary employees without just cause or recourse to the
grievance and arbitration process.
In 2012, without bargaining or giving notice to the Union,
Minteq began requiring new employees to sign a Non-Compete
and Confidentiality Agreement (“NCCA”). The agreement,
approximately 4-1/2 pages long, includes fifteen substantive
sections. Sections 1 and 2 are titled “Covenant Not To
Compete” and “Confidential Information.” These sections,
among other things, prohibit employees from working for
Minteq’s competitors for eighteen months following their
employment and prohibit the disclosure of confidential or
proprietary information. Section 3, “Inventions,” among other
things, requires employees to assign to Minteq the rights to any
inventions or “related know-how” developed during their
employment with Minteq. The NCCA also included section 4
entitled “Interference with Relationships” and section 12 “At-
Will Employee[s].” Minteq did not bargain with the Union
before implementing the NCCA. Section 4 provides:
Interference with Relationships. During the
Restricted Period Employee shall not, directly
or indirectly, as employee, agent, consultant,
stockholder, director, partner or in any other
individual or representative capacity
intentionally solicit or encourage any present or
future customer or supplier of the Company to
terminate or otherwise alter his, her or its
relationship with the Company in an adverse
manner.
Section 12 states:
At-Will-Employee. Employee acknowledges
that this Agreement does not affect Employee’s
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status as an employee-at-will and that no
additional right is provided herein which
changes such status.
As with the agreement as a whole, Minteq did not notify
the Union of the restrictions contained in these paragraphs or
bargain with the Union over their use. On October 30, 2014,
the Union filed an unfair labor practice charge against Minteq
for its failure to bargain with the Union over the NCCA. After
proceedings before an ALJ and an appeal by Minteq, on July
29, 2016, the Board issued its ruling. The Board held that the
Non-Compete Agreement was a mandatory subject of
bargaining not covered by the parties’ CBA. Therefore, it held
that Minteq violated the Fair Labor Standards Act (the “Act”)
by implementing it without first bargaining with the Union.
The Board also held that Minteq separately violated the Act by
implementing the Interference with Relationships and At-Will
Employee provisions. The Board ordered Minteq to cease and
desist from utilizing the NCCA and to comply with other
remedial conditions. Minteq petitions for review.
II.
A.
The “classification of bargaining subjects as ‘terms or
conditions of employment’ is a matter concerning which the
Board has special expertise.” Local Union No. 189,
Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676,
685-86, (1965). Therefore, “our general approach to a Board
construction of the NLRA is quite deferential.” United Food
& Commercial Workers Int’l Union, Local 150-A v. NLRB, 880
F.2d 1422, 1433 (D.C. Cir. 1989) (“UFCW”). We must uphold
the Board’s determinations regarding which collective-
bargaining subjects constitute mandatory subjects of
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bargaining as long as the Board’s determinations are
“reasonably defensible.” Ford Motor Co. v. NLRB, 441 U.S.
488, 497 (1979). However, the Court gives no special
deference to the Board’s interpretation of contracts, instead
interpreting contracts de novo. Int’l Bhd. of Elec. Workers,
Local 47 v. NLRB, 927 F.2d 635, 640-41 (D.C. Cir. 1991).
B.
1.
The Board’s conclusion that the NCCA was a mandatory
subject of bargaining is largely dispositive of the first issue
before us, that is, whether the Board erred in holding that the
imposition of the NCCA requirement for hiring constituted an
unfair labor practice (“ULP”). The Act requires parties to
bargain in good faith regarding “wages, hours, and other terms
and conditions of employment.” 29 U.S.C. § 158(a)(5), (d);
see Ford Motor Co., 441 U.S. at 495-96. The Board asserts
that the NCCA is a mandatory subject of bargaining because it
directly “settle[s] an aspect of the relationship between the
employer and the employees.” First Nat’l Maint. Corp. v.
NLRB, 452 U.S. 666, 676 (1981) (quoting Allied Chem. &
Alkali Workers, Local Union No. 1 v. Pittsburgh Plate Glass
Co., 404 U.S. 157, 177 (1971)). The Board noted that the
NCCA “prohibits an employee from working for another
company that might have any connection to [Minteq’s]
business both during his employment and for 18 months
afterward, effectively imposing a cost in lost economic
opportunities on employees as a consequence of working for
[Minteq].” Minteq Int’l, Inc., 364 N.L.R.B. No. 63, at 3 (July
29, 2016). It also “imposes economic opportunity costs on
employees by broadly restricting their ability to benefit from
their discoveries, inventions, and acquired knowledge related
to working for” Minteq. Id. Thus, the NCCA has “a clear and
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direct economic impact on employees—and thus represent[s]
precisely the sort of matters suitable for collective bargaining.”
Id.; cf. Pittsburgh Plate Glass, 404 U.S. at 180 (suggesting that
provisions affecting the future economic situation “of active
workers are part and parcel of their overall compensation and
hence a well-established statutory subject of bargaining”).
The Board therefore rejected Minteq’s argument that the
provisions of the NCCA were at the core of entrepreneurial
control with “only an indirect and attenuated impact on the
employment relationship.” First Nat’l Maint., 452 U.S. at 677.
This conclusion is consistent with longstanding, uniform Board
precedent finding non-competition and non-disclosure
requirements to be mandatory subjects of bargaining. See Nat’l
Ass’n of Gov’t Emps., 327 N.L.R.B. 676, 676, 684 & n.8
(1999), enforced, 205 F.3d 1324 (2d Cir. 1999); Lower Bucks
Cooling & Heating, 316 N.L.R.B. 16, 16, 22 (1995); Bolton-
Emerson, Inc., 293 N.L.R.B. 1124, 1124, 1129-30 (1989),
enforced, 899 F.2d 104 (1st Cir. 1990). Because the Board’s
reasoning is “reasonably defensible,” UFCW, 880 F.2d at 1433,
we uphold its determination that the implementation of the
NCCA is a mandatory subject of bargaining.
2.
Although implementation of the NCCA would typically be
a mandatory subject of bargaining, Minteq relies on the theory
that it had no duty to bargain over the implementation if the
provisions of the NCCA were covered by the CBA. It is true
that a “union may exercise its right to bargain about a particular
subject by negotiating for a provision in the collective
bargaining contract that fixes the parties’ rights and forecloses
further mandatory bargaining as to that subject.” Int’l Bhd. of
Elec. Workers, 927 F.2d at 640 (citations omitted). Otherwise
put, “to the extent that a bargain resolves any issue, it removes
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that issue pro tanto from the range of bargaining.” Connors v.
Link Coal Co., 970 F.2d 902, 905 (D.C. Cir. 1992).
However, we agree with the Board that the CBA did not
cover all of the NCCA’s provisions. Interpreting the CBA de
novo, we conclude that, at a minimum, nothing in the
management-rights clause of the CBA permits Minteq to
impose obligations on employees after they leave employment,
as most of the NCCA’s provisions purport to do. Nor does the
management-rights clause permit Minteq to bind employees’
“heirs, successors, and assignees.” While the management-
rights clause is a broad one, it is not limitless. In the clause,
the parties agreed that the Company retains rights “including,
but not limited to” certain enumerated rights. These
enumerated rights are limited to traditional managerial
prerogatives to make basic business decisions and govern
conduct in the workplace, such as hiring, assigning and
directing work, setting productivity standards, and issuing
Standards of Conduct. The clause provides nothing with
respect to the heirs and assignees of employees or to their
further capacities after the end of employment. While the list
of rights concludes with a general provision granting the
Company the right to “take whatever action is either necessary
or advisable to manage and fulfill the mission of the Company
and to direct the Company’s employees,” J.A. 502, we do not
read this phrase to “include conduct wholly unlike that
specified in the immediately preceding list,” Mohave Elec. Co-
op., Inc. v. NLRB, 206 F.3d 1183, 1191-92 (D.C. Cir. 2000). In
sum, it is not evident that the parties bargained, certainly not to
agreement, on the subjects covered by the NCCA.
It was therefore unlawful for Minteq to unilaterally
implement the entire NCCA. The Board concedes that, after
the existing NCCA is rescinded, Minteq could lawfully
implement unilaterally some aspects of the NCCA that do fall
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within the CBA’s coverage. But because Minteq does not
argue that any portions of the NCCA are severable in a way
that would permit the Board to rescind only those portions not
covered by the clause, and because it is not necessary to our
disposition, we do not determine which, if any, of the
remaining aspects of the NCCA fall within the CBA.
3.
In addition to finding the general ULP for the imposition
of the NCCA, the Board further concluded that two specific
provisions of the agreement—section 4 covering interference
with the relationships and section 12 titled At-Will
Employee—constituted separate ULPs. The Board ruled that
these provisions were overbroad and independently violated
section 8(a)(1) of the Act. Section 8(a)(1) makes it an unfair
labor practice for an employer “to interfere with, restrain, or
coerce employees in the exercise of” their section 7 rights to
unionize and engage in related labor activities. 29 U.S.C.
§ 158(a)(1).
An employer violates section 8(a)(1) by maintaining an
employment practice that “‘would reasonably tend to chill
employees in the exercise’ of their statutory rights.” Adtranz
ABB Daimler-Benz Transp., N.A., Inc. v. NLRB, 253 F.3d 19,
25 (D.C. Cir. 2001) (quoting Lafayette Park Hotel, 326
N.L.R.B. 824, 825 (1998)). Even if an employer’s rule does
not “‘explicitly restrict[]’ section 7 activity,” the rule is
nonetheless a violation if “employees would reasonably
construe the language to prohibit” them from exercising their
rights. Guardsmark, LLC v. NLRB, 475 F.3d 369, 374 (D.C.
Cir. 2007) (quoting Martin Luther Mem’l Home, 34 N.L.R.B.
No. 75, at *1-2 (May 19, 2004)). Board determinations as to
whether an employer’s conduct unlawfully interferes with
protected activity “are entitled to considerable deference so
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long as they are ‘reasonably defensible.’” Adtranz, 253 F.3d at
25 (quoting Ford Motor Co., 441 U.S. at 497).
It was at the least reasonably defensible for the Board to
conclude that employees would reasonably construe the
language of these provisions of the NCCA to prohibit section
7 activity. The Interference with Relationships clause, as set
forth above, restrains an employee from “directly or indirectly
. . . , solicit[ing] or encourag[ing] any . . . customer or supplier
of the Company to terminate or otherwise alter his, her or its
relationship with the Company . . . .”
The Board found that employees would reasonably read
the language of the Interference with Relationships clause as a
prohibition against “asking customers to boycott [Minteq’s]
products in support of a labor dispute with the Respondent,” in
violation of employees’ section 7 rights. We have “recognized
the right of employees to support a consumer boycott of their
employer’s products in connection with a labor dispute . . . .”
DIRECTV, Inc. v. NLRB, 837 F.3d 25, 33 (D.C. Cir. 2016). We
uphold the Board’s determination that the Interference with
Relationships provision could reasonably be construed to
prohibit employees from soliciting customers for support in a
labor dispute and thereby violates section 8.
Second, after six months of employment, the CBA
imposes on Minteq a “just cause” standard for any discipline,
suspension, or discharge. However, the At-Will Employee
provision states that the
Employee acknowledges that this Agreement
does not affect Employee’s status as an
employee-at-will and that no additional right is
provided herein which changes such status.
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The Board found that employees “would reasonably doubt
whether the CBA’s ‘just cause’ provision remains in effect”
after implementation of the At-Will Employee provision
because “there is nothing in [the At-Will Employee provision],
or the NCCA more broadly, that suggests that the rule applies
only to new, probationary employees.” We agree that an
employee could reasonably construe this provision to make
employees removable at will for the entire time they are
employed, rather than only during the initial six-month
probationary period as provided in the CBA.
Consequently, Minteq may not implement the Interference
with Relationships or At-Will Employee provisions—
regardless of whether they are covered by the CBA—because
those provisions independently violate section 8(a)(1) of the
Act.
***
For the reasons set forth above, Minteq’s petition for
review is denied and the Board’s Order is enforced.
So ordered.