Erie Brush & Manufacturing Corp. v. National Labor Relations Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 15, 2012 Decided November 27, 2012
No. 11-1337
ERIE BRUSH & MANUFACTURING CORP.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 1,
INTERVENOR
Consolidated with 11-1416
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board
Irving M. Geslewitz argued the cause and filed the briefs
for petitioner.
2
Zachary R. Henige, 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.
Leslie Ward argued the cause and filed the brief for
intervenor.
Before: SENTELLE, Chief Judge, HENDERSON and
GRIFFITH, Circuit Judges.
Opinion for the Court filed by Chief Judge SENTELLE.
SENTELLE, Chief Judge: Erie Brush & Manufacturing
Corporation (“Erie”) petitions for review of a National Labor
Relations Board (“NLRB” or “the Board”) decision finding
that Erie violated section 8(a)(5) and (1) of the National Labor
Relations Act (“the Act”), 29 U.S.C. § 158(a)(1), (5). See
Erie Brush & Manufacturing Corp. and Service Employees
International Union, Local 1, 357 N.L.R.B. No. 46, 2011 WL
3860605 (Aug. 9, 2011) (“Board Decision”). NLRB cross-
petitions for enforcement of its order. Erie challenges the
Board’s finding of unlawful refusal to bargain, arguing that
the parties were at a bargaining impasse. Alternatively, Erie
argues that even if we uphold the Board’s finding of an unfair
labor practice, the bargaining remedy imposed exceeded the
Board’s authority. Because we conclude that substantial
evidence does not support the Board’s decision, we grant the
petition for review and vacate the Board’s decision and order.
We need not decide the challenge to the Board’s remedy.
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I. BACKGROUND
Erie manufactures washing and polishing brushes at its
facility in Chicago, Illinois. The Seventh Circuit enforced a
previous NLRB order requiring Erie to recognize and bargain
with the Service Employees International Union, Local 1
(“the Union”) for at least one year. NLRB v. Erie Brush &
Manufacturing Corp., 406 F.3d 795 (7th Cir. 2005). Erie
began negotiations with the Union on June 28, 2005. At the
parties’ first meeting, the Union’s chief negotiator, Charles
Bridgemon, asked that the parties discuss noneconomic issues
before economic ones, and Erie’s chief negotiator, Irving M.
Geslewitz, agreed. Between June 28, 2005 and March 31,
2006, the parties met on eight occasions and reached
agreement on all noneconomic issues except two: union
security and arbitration of grievances. The Union insisted on
including union security and arbitration clauses in the
contract. Erie was equally committed to an open shop and
opposed to arbitration. During the meetings, Bridgemon
repeatedly told Geslewitz that the Union had no room to
compromise on union security or arbitration, calling those
issues “make or break on [the] whole contract” and saying
that the Union “can’t work on these things” and “there
wouldn’t be a contract without a union security clause.”
Geslewitz was just as adamant, refusing to agree to a contract
that contained union security or arbitration provisions.
At the March 31 meeting, Bridgemon repeated a previous
offer to modify his position on arbitration if Geslewitz would
agree to change the contract’s no-strike provision, but
Geslewitz again declined the offer. Bridgemon, according to
his own testimony, told Geslewitz that he felt the parties were
at an impasse on union security and arbitration, and Geslewitz
agreed. Bridgemon suggested mediation, and Geslewitz said
he would consult with Erie’s president on the prospect of
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mediation even though he saw no potential middle ground on
those two issues.
The parties next corresponded in a series of emails,
beginning on April 5, 2006, when Geslewitz wrote to
Bridgemon that Erie would not agree to mediation because
neither party was willing to compromise on union security or
arbitration, rendering mediation futile. Over a month later, on
May 10, Bridgemon responded and suggested they negotiate
economic issues and come back to the noneconomic ones. On
May 26, Geslewitz asked whether the Union’s positions on
union security or arbitration had changed, because otherwise
further negotiations would be pointless. Bridgemon’s May 31
response stated that he was “willing to continue to discuss the
union security and arbitration issues with the local,” and he
again requested a meeting. Geslewitz’s June 1 email asked
whether Bridgemon had authorization to change his position
and if so, whether he had a proposal to offer. A day later,
Bridgemon said he had “some give on the arbitration issue”
but not on union security, and declined to provide a proposal.
Geslewitz responded that it was still pointless to meet unless
union security was on the table, and that he wanted more
information in the form of a proposal.
Nine days later, on June 16, the Union threatened to file
an unfair labor practice charge, and shortly thereafter, the
parties scheduled a meeting for July 24. But on July 5, an
employee who was a member of the bargaining unit delivered
to Erie’s president a handwritten document signed by 18 of 21
bargaining unit employees. The document stated (in Spanish)
that the employees of Erie (most of whom have Spanish
surnames) did not want to be represented by the Union.
Based upon this petition, Geslewitz informed Bridgemon that
Erie was withdrawing recognition and canceling the July 24
meeting.
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After the Union brought unfair labor practice charges, the
Board’s General Counsel issued a complaint. An NLRB
Administrative Law Judge (“ALJ”) found that Erie had
violated section 8(a)(5) and (1) by refusing to bargain with the
Union between May 10 and June 21, 2006. Board Decision at
12 (ALJ Op.). The ALJ held that this refusal to bargain
tainted the employees’ decertification petition, so that Erie’s
withdrawal of recognition of the Union also violated section
8(a)(5) and (1). Id.Erie filed exceptions to the ALJ’s findings. A divided
Board affirmed the ALJ’s findings and order with only minor
modifications. See id. at 1–5 (Board Op.). Member Hayes
dissented from the Board’s decision, stating that because the
parties were at a bona fide impasse on union security and
arbitration, he would reverse the ALJ’s finding of unlawful
refusal to bargain. Id. at 9 (Dissenting Op.).
As a remedy, the Board ordered Erie to cease and desist
from refusing to bargain. Id. at 4–5 (Board Op.), 13 (ALJ
Op.). The Board ordered Erie to recognize and bargain with
the Union as the exclusive bargaining representative of Erie
employees for at least six months. Id. Finally, the Board
required Erie to physically post and electronically distribute a
notice announcing that Erie would no longer engage in
violations of the Act. Id.
Erie petitions this court for review, arguing that the
Board’s finding of unlawful refusal to bargain was not
supported by substantial evidence in the record. In addition,
Erie challenges the propriety of the Board’s affirmative
bargaining order.
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II. DISCUSSION
Section 8(a)(5) of the Act prohibits an employer from
“refus[ing] to bargain collectively with the representatives of
his employees.” 29 U.S.C. § 158(a)(5). The obligation to
“bargain collectively” requires “the employer and the
representative of the employees to meet at reasonable times
and confer in good faith with respect to . . . the negotiation of
an agreement,” but it “does not compel either party to agree to
a proposal or require the making of a concession.” Id. §
158(d). The bargaining obligation is suspended temporarily
when the parties reach a lawful impasse. Serramonte
Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232 (D.C. Cir. 1996).
A lawful impasse “occurs when ‘good faith negotiations have
exhausted the prospects of concluding an agreement.’”
TruServ Corp. v. NLRB, 254 F.3d 1105, 1114 (D.C. Cir.
2001) (quoting Taft Broadcasting Co., 163 NLRB 475, 478
(1967)). In other words, impasse exists if the parties “are
warranted in assuming that further bargaining would be
futile.” Id. (quoting Wycoff Steel, Inc., 303 NLRB 517, 523
(1991)) (internal quotation mark omitted). A violation of
section 8(a)(5) results in a derivative violation of section
8(a)(1), which makes it unlawful for an employer “to interfere
with . . . employees in the exercise of” their section 7 rights.
29 U.S.C. § 158(a)(1); see id. § 157; Wayneview Care Center
v. NLRB, 664 F.3d 341, 347 n.1 (D.C. Cir. 2011).
This court must affirm Board findings if they are
“supported by substantial evidence on the record considered
as a whole.” 29 U.S.C. § 160(e). Though our review of
NLRB decisions is “highly deferential,” Parsippany Hotel
Management Co. v. NLRB, 99 F.3d 413, 419 (D.C. Cir. 1996),
we will not “merely rubber-stamp NLRB decisions.” Avecor,
Inc. v. NLRB, 931 F.2d 924, 928 (D.C. Cir. 1991). Indeed, we
bear the “responsibility to examine carefully both the Board’s
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findings and its reasoning.” Id. (quoting Peoples Gas System,
Inc. v. NLRB, 629 F.2d 35, 42 (D.C. Cir. 1980)).
With this responsibility in mind, we turn our attention to
the Board’s finding that Erie unlawfully refused to bargain
with the Union. Erie objects to this finding, arguing that the
parties were at a bargaining impasse on March 31, 2006, after
their final in-person meeting. After review of the record, we
conclude that the record evidence not only does not support
the Board’s finding, but uniformly supports Erie’s position.
Impasse on a single critical issue can create an impasse
on the entire agreement. See CalMat Co., 331 NLRB 1084,
1097 (2000). A party asserting impasse based on a single
issue must show that: first, a good-faith bargaining impasse
actually existed; second, the single issue involved was
critical; and third, “the impasse on this critical issue led to a
breakdown in the overall negotiations.” Id. The Board does
not dispute that Erie established the second CalMat factor:
union security was a critical issue. See Board Decision at 2;
Resp’t Br. at 26.
On the first factor, the Board found that Erie failed to
establish the existence of a good-faith bargaining impasse
before May 10. The Board explained that Bridgemon’s
suggestion of mediation on March 31 “show[ed] that he did
not believe that further bargaining over either issue would be
futile.” Board Decision at 2. The Board took Bridgemon’s
promise to continue discussing the issues with the Union as
evidence that the Union’s positions on union security and
arbitration were “gradually softening.” Id. at 3.
The Board’s finding of no impasse on union security or
arbitration, however, is unsupported by substantial evidence.
Considerations bearing on the existence of an impasse include
8
“the bargaining history, the good faith of the parties in
negotiations, the length of the negotiations, the importance of
the issue or issues as to which there is disagreement, [and] the
contemporaneous understanding of the parties as to the state
of negotiations.” TruServ, 254 F.3d at 1114 (quoting Taft,
163 NLRB at 478) (internal quotation marks omitted). In this
case, the evidence overwhelmingly points to the existence of
an impasse on March 31. The parties had negotiated over a
period of ten months, and had agreed to discuss noneconomic
issues before moving on to economic ones. At no point
during the ten month negotiation did either party propose a
compromise on union security or arbitration that was
acceptable to the other party. The Board did not rely on any
bad faith by the parties, see Resp’t Br. at 26 n.8, and it did not
question the importance of union security or arbitration. Both
parties understood bargaining to be at an impasse on March
31: Bridgemon, the Union’s bargaining representative,
explicitly stated that he viewed the negotiations as being at an
impasse, and Geslewitz, the company’s representative,
agreed.
The Board pointed to two pieces of evidence in its
finding of no impasse. First, the Board took Bridgemon’s
suggestion of mediation to mean that Bridgemon considered
further bargaining on union security and arbitration
potentially productive. But we have held that “a vague
request by one party for additional meetings, if
unaccompanied by an indication of the areas in which that
party foresees future concessions, is . . . insufficient to defeat
an impasse where the other party has clearly announced that
its position is final.” TruServ, 254 F.3d at 1117. On March
31, Bridgemon offered no possibility of future concessions on
union security or arbitration. In fact, quite to the contrary:
Bridgemon explicitly stated that the parties were “at impasse”
on union security and arbitration, told Geslewitz that he had
9
no room to compromise on those issues, and suggested an
arbitration proposal that Erie had already repeatedly rejected.
Even assuming the Union’s recycling of an already-declined
arbitration proposal constituted a “softening” of its position
on arbitration, the Union had not budged on union security as
of March 31. We agree with the Board’s dissenting member
that the “mere invocation” of mediation does not “somehow
magically ward[] off a deadlock.” Board Decision at 8
(Dissenting Op.).
Second, the Board relied upon Bridgemon’s statement
that he would continue discussing the issues with the Union.
Id. at 3 (Board Op.). But Bridgemon made no such statement
on March 31. Bridgemon made a promise to continue
discussing the issues with the Union on March 3, but on
March 31, he made no such promise, and stated that he
considered the negotiations at an impasse. Bridgemon made a
similar promise on May 31, but we have recently reiterated
that the Board cannot rely on a party’s “post-impasse
conduct” to find no impasse. Laurel Bay Health &
Rehabilitation Center v. NLRB, 666 F.3d 1365, 1375 (D.C.
Cir. 2012). Even if Bridgemon had made a contemporaneous
promise, a negotiating agent’s bare promise to continue
discussing with his principal the topics of negotiations does
not imply any moderation in the party’s position. See id.(finding impasse where the union representative’s statements
“did not actually commit the [u]nion to a new position or
contain any specific proposals” (quoting Serramonte, 86 F.3d
at 233) (internal quotation marks and alterations omitted)).
Before the court, counsel for the NLRB attempts to
distinguish TruServ, in which we found impasse even though
the union disagreed that the parties were at impasse, TruServ,
254 F.3d at 1117–18, on the ground that “the Union here did
more than simply say the parties weren’t at impasse.” Resp’t
10
Br. at 23. NLRB’s position is undermined by the
inconvenient fact that the Union here not only did not say that
the parties “weren’t at impasse” on March 31, its
representative said — out-loud and in-person — that they
were “at impasse.” This fact makes it even more obvious than
it was in TruServ that the parties were at impasse. Thus, the
Board’s finding regarding the first CalMat factor, that no
good faith impasse existed, is not supported by substantial
evidence in the record, for the evidence “practically shouted
impasse” on March 31. Laurel Bay, 666 F.3d at 1375 n.13.
Turning our attention to the third CalMat factor, whether
the critical issue impasse led to an overall breakdown in
negotiations, the Board found that even if the parties had
reached a good faith impasse on union security or arbitration,
Erie failed to show that the impasse led to a breakdown in
negotiations. Board Decision at 4. Once again, substantial
evidence does not support this finding. Each party made clear
throughout the negotiations leading up to March 31 that it
would not sign a contract that adopted the other party’s
position on union security. Both parties considered union
security “make or break” on the entire contract. As in
CalMat, the critical issue “pervaded the negotiations” and the
parties’ “positions never changed.” 331 NLRB at 1098. The
Board’s claim that one of the parties would decide to change
its position on union security “was not based on the record
evidence; rather, the Board relied on its intuitive belief that,
upon further bargaining, each side would have made
additional concessions.” TruServ, 254 F.3d at 1116. Such
rank speculation cannot form the basis of a sound
administrative finding, for we have emphasized that “each
party, not the Board, determines at what point it ceases to be
willing to compromise.” Id. “You never know” is no
substitute for substantial evidence.
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At oral argument, the Union pressed the position that
impasse cannot be found if the parties have not negotiated
over economic issues. But the Board expressly refused to rest
its decision on that proposition. Board Decision at 4 n.8.
Though we seriously doubt the correctness of the Union’s
position, we need not reach that issue. “The courts may not
accept appellate counsel’s post hoc rationalization for agency
action; Chenery requires that an agency’s discretionary order
be upheld, if at all, on the same basis articulated in the order
by the agency itself.” Burlington Truck Lines, Inc. v. United
States, 371 U.S. 156, 168–69 (1962) (citing SEC v. Chenery,
332 U.S. 194, 196 (1947)); see also Jochims v. NLRB, 480
F.3d 1161, 1169 (D.C. Cir. 2007).
All record evidence supports the proposition that the
parties’ diametrically opposed positions on union security
“presented . . . an insurmountable obstacle to an agreement.”
Richmond Electrical Services, Inc., 348 NLRB 1001, 1003
(2006). Because “the parties’ failure to agree on this issue
destroyed any opportunity for reaching a . . . collective-
bargaining agreement,” CalMat, 331 NLRB at 1098, the
impasse on union security led to a breakdown in overall
negotiations. Therefore, the record evidence clearly
demonstrates that Erie met its burden of showing that the
parties were at an impasse on the critical issue of union
security on March 31, 2006.
The Board found that “even if the parties were at a
momentary impasse . . . , it was broken well before [Erie]
finally agreed in late June to resume bargaining.” Board
Decision at 3 n.7. This finding is not supported by substantial
evidence. An impasse is considered broken only if “the party
asserting that the impasse has been broken” points to
“substantial evidence in the record that establishes changed
circumstances sufficient to suggest that future bargaining
12
would be fruitful.” Serramonte, 86 F.3d at 233. According to
the Board, Bridgemon’s assurance on May 31 that he would
continue discussing union security and arbitration with the
Union showed changed circumstances sufficient to break the
impasse. But this communication is entirely inadequate to
break the impasse. It did not “commit[] the Union to a new
position or contain[] any specific proposals.” Id. (“[A]
party’s ‘bare assertions of flexibility on open issues and its
generalized promises of new proposals’” do not represent
“‘any change, much less a substantial change’ in that party’s
negotiating position.” (quoting Civic Motor Inns, 300 NLRB
774, 776 (1990))). A negotiator’s promise to do that which he
has already and always done — discuss the bargaining issues
with his principal — offers nothing more than “a handful of
air,” id., and demonstrates no change in circumstances.
The Board also relied upon Bridgemon’s June 2
statement that he had room to move on arbitration to show
changed circumstances. First, this communication regarding
arbitration self-evidently fails to show changed circumstances
regarding the parties’ impasse on the critical issue of union
security. In fact, Bridgemon’s June 2 email stated that he did
not “have any give” on union security. Second, Bridgemon’s
communication did not actually demonstrate changed
circumstances on any impasse over arbitration. In the June 2
email, Bridgemon wrote: “I do have some give on the
arbitration issue . . . [, but] I don’t have a counter[-proposal]
at this point.” This statement constitutes a “bare assertion[] of
flexibility” devoid of any specific proposals and is insufficient
to break a bargaining impasse. Id. In short, the Board’s
finding that the Union established changed circumstances
sufficient to break any impasse is unsupported by substantial
evidence in the record.
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Because Erie and the Union were at a lawful impasse on
at least the critical issue of union security from March 31
through the end of the parties’ relevant communications, Erie
was relieved of the duty to bargain during that time period.
See id. at 232 (“[A] good-faith impasse in negotiations
temporarily suspends the duty to bargain.”). Thus, Erie did
not unlawfully refuse to bargain. The Board’s decision
finding that Erie violated section 8(a)(5) and (1) was not
supported by substantial evidence in the record.
Erie argues alternatively that the Board erred in imposing
a bargaining order as a remedy and reminds us that we have
often told the Board that such an order is an extraordinary
remedy that may not be imposed in run-of-the-mill cases. See
Vincent Industrial Plastics, Inc. v. NLRB, 209 F.3d 727, 738
(D.C. Cir. 2000). While this proposition is true enough, we
have no occasion to examine the question in the present case,
as our decision on the merits issue of impasse moots any issue
as to the propriety of remedy. Nor need we discuss the
Board’s cross-petition for enforcement of the order since our
merits decision renders that petition moot.
III. CONCLUSION
For the foregoing reasons, we grant the petition for
review, vacate the Board’s decision and order, and deny the
Board’s cross-petition for enforcement.
So ordered.