So Nuc Oprt Co v. NLRB

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 11, 2007 Decided May 6, 2008
No. 07-1035
SOUTHERN NUCLEAR OPERATING COMPANY, ET AL.,
PETITIONERS
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with
07-1067
On Petition for Review and Cross-Application for
Enforcement
of an Order of the National Labor Relations Board
Seth T. Ford argued the cause for petitioners. With him
on the briefs were Robert H. Buckler and Evan H. Pontz.
Jeffrey J. Barham, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the brief
were Ronald E. Meisburg, General Counsel, John H.
Ferguson, Associate General Counsel, Linda Dreeben,
Assistant General Counsel, and Fred B. Jacob, Supervisory
Attorney.
2
Before: GINSBURG, HENDERSON, and GRIFFITH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
GRIFFITH, Circuit Judge: In 2000, four subsidiaries of the
Southern Company made modifications to the health-care and
life-insurance benefits of their future retirees without
negotiating with their employees’ unions. The unions filed
unfair labor practice charges against these subsidiaries, and
the National Labor Relations Board determined that the
subsidiaries violated Sections 8(a)(1) and 8(a)(5) of the
National Labor Relations Act by making the changes without
bargaining collectively. The subsidiaries petitioned for
review, and the Board cross-applied for enforcement of its
order.
We grant the petition in part and the cross-application in
part. We agree with the Board that the National Labor
Relations Act did not leave the subsidiaries free to make the
changes to the retirement benefits without first bargaining
collectively. We also agree with the Board that the unions did
not waive their bargaining rights in the course of their
dealings with the subsidiaries. We agree with the subsidiaries,
however, that the unions contractually surrendered their
bargaining rights with respect to the health-care retirement
benefits of three of the subsidiaries. In all other respects, we
enforce the Board’s order.
I.
The Southern Company (“Southern”) is an electric utility
that owns several subsidiary companies. Four of these
subsidiaries — the Southern Nuclear Operating Company
3
(“SNOC”),1 the Alabama Power Company (“APC”),2 the
Georgia Power Company (“GPC”),3 and the Gulf Power
Company (“Gulf”)4 — offer their employees a package of
health-care and life-insurance retirement benefits.5 Unlike
pension benefits, which vest while an employee is still
working, these so-called Other Post-Retirement Benefits
(“OPRBs”) vest only if and when an employee actually retires
from his employer. An employee who leaves prior to
retirement cannot claim the OPRB package.
These OPRBs are described in benefit-plan guides, which
are provided to the subsidiaries’ employees and their unions.
Some of these guides have a “reservation-of-rights clause”
that grants the employer the right to “terminate or amend this
Plan in whole or in part, including but not limited to any
Benefit Option described herein, at any time so long as any
participant is reimbursed for any covered expenses already
incurred under this Plan.”
1
Employees at SNOC’s Vogtle and Hatch plants are represented by
International Brotherhood of Electrical Workers Local Union
(“Local”) 84. Employees at SNOC’s Farley plant are represented by
Local 796, which has delegated its bargaining authority to System
Council U-19, a consortium of local unions. See infra Part IV.
2
APC’s employees are represented by Locals 345, 833, 904, 391,
801, 841, 1053, 796, and 2077 (“APC Locals”). The APC Locals
have delegated their bargaining authority to System Council U-19.
See infra Part IV.
3
GPC’s employees were, at the time of the events giving rise to this
case, represented by Local 1208. GPC is a successor employer to
Savannah Electric and Power Company (“SEP”), which was a party
to the proceedings before the Board. Once SEP merged into GPC,
Local 1208 became part of Local 84.
4
Gulf’s employees are represented by Local 1055.
5
The benefit policies of the other Southern subsidiaries are
immaterial to this case.
4
The four subsidiaries (collectively “the Companies”) and
other Southern affiliates decided in 1995 that, effective in
2002, they would make two major changes to the OPRB
package. First, they would end their practice of paying all
health-care premiums for retirees and would instead pay only
60 to 90 percent of each retiree’s premiums up to $7500
annually. Second, they would alter their life-insurance
payment policy for retirees by providing $2000 life insurance
for every year of a retiree’s accredited service, up to a
maximum of $50,000. (We will refer to these changes as the
“1995 changes” or “1995 modifications.”) The changes were
to apply to all employees except those who had either already
retired or worked a minimum period of time by the effective
date. The employers made the changes without giving the
employees’ unions advance notice or an opportunity to
negotiate. Many of the unions acquiesced in the changes, but
the unions at Southern’s Georgia and Mississippi subsidiaries
filed unfair labor practice charges with the National Labor
Relations Board (“Board”). See Ga. Power Co. v. NLRB, 176
F.3d 494 (11th Cir. 1999), aff’g without opinion, Ga. Power
Co., 325 N.L.R.B. 420 (1998); Miss. Power Co. v. NLRB, 284
F.3d 605 (5th Cir. 2002), vacating in part and enforcing in
part, Miss. Power Co., 332 N.L.R.B. 530 (2000).
In 2000, the Companies decided to postpone the effective
date of the changes until 2006 and to expand the number of
employees exempted from the modifications. (We will refer
to these decisions as the “2000 changes” or “2000
modifications.”) The unions asked to bargain, but the
Companies rejected the requests.
The unions filed unfair labor practice charges against the
Companies, and the Board determined that their failure to
bargain had violated Sections 8(a)(1) and 8(a)(5) of the
National Labor Relations Act (“NLRA”). See S. Nuclear
5
Operating Co., 348 N.L.R.B. No. 95, 2006 NLRB LEXIS 539
(2006). The Companies now petition for review, and the
Board cross-applies for enforcement of its order. We have
jurisdiction under 29 U.S.C. § 160(e)–(f), and must sustain
the Board’s decision “unless, reviewing the record as a whole,
it appears that the Board’s factual findings are not supported
by substantial evidence, or that the Board acted arbitrarily or
otherwise erred in applying established law to the facts at
issue.” Int’l Alliance of Theatrical & Stage Employees v.
NLRB, 334 F.3d 27, 31 (D.C. Cir. 2003) (citation omitted).
II.
The Companies ask us to set aside the Board’s conclusion
that they were required to bargain collectively before making
the 2000 changes. We first consider the Companies’ argument
that the NLRA left them free to make the changes
unilaterally.
Section 8(a)(5) of the NLRA makes it an unfair labor
practice for an employer to “refuse to bargain collectively
with the representatives of his employees.” 29 U.S.C.
§ 158(a)(5). Section 8(d) requires employers to bargain
collectively before introducing changes “with respect to
wages, hours, and other terms and conditions of
employment.” Id. § 158(d). An employer violates Section
8(a)(5) by making any unilateral changes to the mandatory
bargaining subjects covered by Section 8(d). NLRB v. Katz,
369 U.S. 736, 743 (1962).6 The Companies argue that their
6
A violation of Section 8(a)(5) is also a violation of Section
8(a)(1), which makes it an unfair labor practice for an employer to
“interfere with, restrain, or coerce employees in the exercise” of
their statutory right to bargain collectively through representatives
of their own choosing. 29 U.S.C. § 158(a)(1); see also Brewers &
6
unilateral changes to the OPRBs were permissible because the
future retirement benefits of current employees are not
mandatory bargaining subjects under Section 8(d). We are not
persuaded.
The governing principle is found in Allied Chemical &
Alkali Workers of America, Local Union No. 1 v. Pittsburgh
Plate Glass Co., 404 U.S. 157 (1971). In that case, the
Supreme Court held that retirement benefits for workers who
have already retired are not mandatory bargaining subjects
because retirees are not “employees” under the NLRA and are
therefore not protected by the Act. See id. at 168 (“The
ordinary meaning of ‘employee’ does not include retired
workers; retired employees have ceased to work for another
for hire.”). But the Court also made clear that retirement
benefits for current employees are mandatory bargaining
subjects: “To be sure, the future retirement benefits of active
workers are part and parcel of their overall compensation and
hence a well-established statutory subject of bargaining.” Id.
at 180. Because the 2000 modifications affected future
retirement benefits of current employees, the Companies were
required to bargain over them with the unions.
The Companies argue that the statement in Pittsburgh
Plate Glass about future retirement benefits is a dictum and
should not supply a rule of decision in this case. We have
more faith than do the Companies in Supreme Court
declarations that begin with “To be sure . . . .” See United
States v. Oakar, 111 F.3d 146, 153 (D.C. Cir. 1997) (stating
that “carefully considered language of the Supreme Court,
even if technically dictum, generally must be treated as
authoritative”) (quotation marks omitted). But even if the
Maltsters, Local Union No. 6 v. NLRB, 414 F.3d 36, 41 (D.C. Cir.
2005).
7
question were an open one, the Companies’ argument fails
because “classification of bargaining subjects as ‘terms [and]
conditions of employment’ is a matter concerning which the
Board has special expertise.” Local Union No. 189,
Amalgamated Meat Cutters & Butcher Workmen of N. Am. v.
Jewel Tea Co., 381 U.S. 676, 685–86 (1965); see also Ford
Motor Co. v. NLRB, 441 U.S. 488, 497 (1979) (“Construing
and applying the duty to bargain . . . [lies] at the heart of the
Board’s function.”). The Board has decided that future
retirement benefits fit in Section 8(d)’s basket of mandatory
bargaining subjects. This decision, particularly in light of the
Board’s expertise, is rational and therefore lawful. See id. at
495 (noting that the Board’s “judgment as to what is a
mandatory bargaining subject is entitled to considerable
deference”). No one could doubt that current employees are
rightly concerned about the retirement benefits that they will
receive in the future. Giving them the right to bargain
collectively over those benefits is certainly sensible.
Alternatively, the Companies argue that including future
vested retirement benefits in Section 8(d) might be acceptable,
but including future non-vested retirement benefits — like the
ones here — is unacceptable. It is doubtful, however, that
current workers are not affected by the OPRBs merely
because the OPRBs are not “vested.” The possibility of
obtaining the OPRBs by continuing to work for and then
retiring from an employer may well induce an employee to
continue with that employer and may well affect the present
compensation he is willing to accept from his employer.
Moreover, in concluding that future retirement benefits for
current employees are a mandatory bargaining subject, we are
in accord with the other circuit courts that have decided the
issue. See Miss. Power Co., 284 F.3d at 614; Ga. Power Co.,
176 F.3d 494, aff’g without opinion, 325 N.L.R.B. at 420;
Inland Steel Co. v. NLRB, 170 F.2d 247, 250–51 (7th Cir.
8
1948); see also Am. Postal Workers Union v. U.S. Postal
Serv., 707 F.2d 548, 555 (D.C. Cir. 1983) (dictum).
The Companies also contend that it would be folly to
require bargaining because their 2000 modifications did not
amount to much. We recognize that “in order for a statutory
bargaining obligation to arise with respect to a particular
change unilaterally implemented by an employer, such change
must be a ‘material, substantial, and [] significant’ one
affecting the terms and conditions of employment of
bargaining unit employees.” Alamo Cement Co., 281
N.L.R.B. 737, 738 (1986). But if changes to cafeteria prices,
see Ford Motor Co., 441 U.S. at 497–98, and the timing of
lunch breaks, see Microimage Display Div. of Xidex Corp. v.
NLRB, 924 F.2d 245, 253 (D.C. Cir. 1991), require
bargaining, then we have no trouble concluding that the 2000
changes to retirement benefits do as well.
The Companies suggest that our decision will create a
perverse incentive for employers to spring unilateral changes
on workers only after they retire, thereby avoiding Pittsburgh
Plate Glass’s prohibition on unilateral changes to the
retirement benefits of future retirees. We are without authority
to consider this policy argument, which should be directed to
Congress or the Board, not to us.
III.
Having found that the NLRA does not shield the
Companies’ unilateral changes to the OPRBs in 2000, we turn
to the Companies’ argument that the unions surrendered their
right to bargain over the 2000 changes through either waiver
or contract.
A. Waiver
9
“A waiver occurs when a union knowingly and
voluntarily relinquishes its right to bargain about a matter. . . .
[W]hen a union waives its right to bargain about a particular
matter, it surrenders the opportunity to create a set of
contractual rules that bind the employer, and instead cedes
full discretion to the employer on that matter. For that reason,
the courts require ‘clear and unmistakable’ evidence of waiver
and have tended to construe waivers narrowly.” Dep’t of the
Navy, Marine Corps Logistics Base v. FLRA, 962 F.2d 48, 57
(D.C. Cir. 1992). “[C]lear and unmistakable waivers have
been inferred from the structure of collective bargaining
agreements and from bargaining history showing that the
parties have ‘consciously explored’ or ‘fully discussed’ the
matter on which the union has ‘consciously yielded’ its
rights.” Gannett Rochester Newspapers v. NLRB, 988 F.2d
198, 203 n.2 (D.C. Cir. 1993) (citations omitted). The
Companies contend that the unions, by not negotiating over
the 1995 modifications and by not challenging the wording of
the reservation-of-rights clauses in the benefit-plan guides,
waived their right to bargain over the 2000 changes. We
disagree because neither event clearly and unmistakably
demonstrates that the unions waived any right they may have
had to bargain over the 2000 changes.
The unions’ conduct pertaining to the 1995 modifications
has no bearing on their right to bargain over the 2000
changes. The two episodes were separate and independent
events. The Companies made changes to the OPRBs in 1995;
then in 2000, they made another round of modifications.
Certainly, nothing in the history of the 1995 changes suggests
the unions consciously explored or fully discussed the 2000
changes and then voluntarily relinquished their right to
bargain over them. The fact that the unions may have waived
their bargaining rights in 1995 — an issue we need not
10
address — does not undermine their bargaining rights in
2000. As the Board has long held, “[i]t is well settled that
even past failure to assert a statutory right does not estop
subsequent assertion of that right.” Rockwell Int’l Corp., 260
N.L.R.B. 1346, 1347 n.6 (1982); see also Ciba-Geigy
Pharms. Div. v. NLRB, 722 F.2d 1120, 1127 (3d Cir. 1983)
(“Each time the bargainable incident occurs . . . [the] Union
has the election of requesting negotiations or not.”) (quotation
marks omitted); NLRB v. Roll & Hold Warehouse & Distrib.
Corp., 162 F.3d 513, 518 (7th Cir. 1998) (“The failure to
demand bargaining in the past, without more, does not waive
that bargaining right forever.”).
The unions’ failure to negotiate over the reservation-of-
rights clauses is likewise independent of the Companies’ 2000
modifications. Nothing in the record suggests that the unions,
by not negotiating over the clauses, contemplated waiving
their right to bargain in 2000. Absent such indication, we
cannot conclude that the unions clearly and unmistakably
decided to waive their bargaining rights in 2000.
B. Contract
“[T]he duty to bargain under the NLRA does not prevent
parties from negotiating contract terms that make it
unnecessary to bargain over subsequent changes in terms or
conditions of employment.” NLRB v. U.S. Postal Serv., 8 F.3d
832, 836 (D.C. Cir. 1993). In determining whether a union
has contractually surrendered its statutory right to bargain, we
apply the aptly named “covered by” doctrine: “[T]here is no
continuous duty to bargain during the term of [a collective-
bargaining] agreement with respect to a matter covered by the
contract.” Id. “[T]he normal deference we must afford the
Board’s policy choices does not apply in this context . . . .”
Enloe Med. Ctr. v. NLRB, 433 F.3d 834, 837 (D.C. Cir. 2005).
11
Instead, “we interpret collective bargaining agreements de
novo.” Id. at 839 n.4.7
The Companies’ argument is divided into two parts. First,
they contend that their collective-bargaining agreements with
the unions incorporated the benefit plans’ reservation-of-
rights clauses on the basis of the unions’ “course of conduct.”
For instance, the Companies suggest that because the unions
have copies of the benefit plans and have relied on the
benefits provided by those plans, the unions have also
incorporated the reservation-of-rights clauses in those plans
into the collective-bargaining agreements. Our cases,
however, imply that it is only express language in the
collective-bargaining agreement that incorporates a
reservation-of-rights clause. Cf. Local Union No. 47, Int’l
Bhd. of Elec. Workers v. NLRB, 927 F.2d 635, 640 (D.C. Cir.
1991) (“The 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.”)
(emphasis added).
Second, the Companies assert that the collective-
bargaining agreements incorporated the reservation-of-rights
clauses by express reference. Here, the Companies are on
firmer ground. In BP Amoco Corp. v. NLRB, we held that
when a collective-bargaining agreement expressly
incorporates a benefit plan, all the plan’s clauses, including
7
As we have said many times, “[t]he ‘covered by’ and ‘waiver’
inquiries are analytically distinct: A waiver occurs when a union
knowingly and voluntarily relinquishes its right to bargain about a
matter; but where the matter is covered by the collective bargaining
agreement, the union has exercised its bargaining right.” BP Amoco
Corp. v. NLRB, 217 F.3d 869, 873 (D.C. Cir. 2000) (quotation
marks omitted).
12
any reservation-of-rights clauses, are also incorporated into
the agreement, “thereby authoriz[ing] [the employer] to
unilaterally modify the [plan] without the Union’s consent.”
217 F.3d 869, 874 (D.C. Cir. 2000). In that case, we were
faced with several agreements and were asked to decide
whether they incorporated benefit plans by reference. Some of
the agreements referred to “Employee Benefit Plans” and
“Benefits Plan Booklets.” Id. at 873.8 Others referred to
“[b]enefit plans for the Company.” Id. at 873.9 We concluded
that “[i]n each case, the quoted language explicitly makes the
plans a part of the collective bargaining agreement.” Id. at
874. Because the plans contained reservation-of-rights clauses
that allowed the employer to make unilateral changes, it was
free to do so. Id. With BP Amoco in mind, we consider the
Companies’ collective-bargaining agreements one by one:
APC: APC’s collective-bargaining agreement identifies
the health-care plans offered to its employees. Under BP
Amoco, such direct references incorporate the plans. APC
could unilaterally modify its health-care plans because they
included a reservation-of-rights clause stating that “[t]he
company has the right and may terminate or amend this Plan
in whole or in part, including but not limited to any Benefit
Option described herein.” By contrast, APC was not
authorized to modify the life-insurance OPRBs because,
regardless whether the collective-bargaining agreement
8
Specifically, they “recite[d] that specified Employee Benefit
Plans, including the Amoco Medical Plan, are generally set forth in
the current Benefits Plan Booklets.” 217 F.3d at 873 (quotation
marks omitted).
9
Specifically, they stated that “[b]enefit plans for the Company . . .
will continue in force during the life of this Agreement with the
understanding that these Plans may be bargained upon but will not
be subject to arbitration.” 217 F.3d at 873–74 (quotation marks
omitted).
13
incorporated a life-insurance plan, there is no record evidence
of any reservation-of-rights clause relating to life insurance.
GPC: The GPC collective-bargaining agreement states
that “the Unions agree to waive negotiations on all issues
regarding the ‘Georgia Power Company Medical Benefits
Plan.’ ” This language unambiguously forecloses the unions’
right to bargain over the medical benefits for GPC employees,
regardless whether the agreement also incorporates a
reservation-of-rights clause. GPC therefore was authorized to
unilaterally modify the health-care OPRBs in 2000.10
However, the GPC agreement makes no reference to GPC’s
life-insurance plan, so GPC had no authority to modify its
life-insurance OPRBs.
Gulf: The Companies do not argue that the Gulf
collective-bargaining agreement incorporates by reference a
reservation-of-rights clause. Gulf was therefore not authorized
to modify either its health-care or life-insurance OPRBs.
SNOC (Farley plant): The collective-bargaining
agreement for the Farley plant refers to SNOC’s “insurance
plans.”11 Reference in the next sentence of the agreement to
“medical insurance rates” suggests that the health-insurance
10
We note that the bargaining-waiver provision in the collective-
bargaining agreement does not apply to issues relating to “the ratio
of employee and employer contributions” for GPC’s medical-
benefit plan. However, the Board did not argue that this exception
is relevant to the 2000 changes. We therefore have no need to
decide whether the exception is applicable to the changes at issue in
this case.
11
The agreement says that Farley employees “will be placed on
Southern Nuclear Operating Company’s insurance plans at the
applicable rates for Southern Nuclear Operating Company as they
exist during the life of the agreement.”
14
plan is among the “insurance plans” to which the agreement
refers. Though vague, this reference to the health-insurance
plan is clearer than the references in BP Amoco that we used
to find that the insurance plan was part of the collective-
bargaining agreement. The reservation-of-rights clause in the
Farley health-care plan states that “[t]he company has the
right and may terminate or amend this Plan in whole or in
part, including but not limited to any Benefit Option described
herein.” As we concluded with respect to the same clause in
APC’s health-care plans, that language authorizes the
unilateral modification of the health-care OPRBs. But
regardless whether the collective-bargaining agreement
incorporated a life-insurance plan, we conclude that the
Farley plant was not authorized to modify the life-insurance
OPRBs because there is no record evidence of any
reservation-of-rights clause relating to life insurance.
SNOC (Hatch and Vogtle plants): The collective-
bargaining agreement for SNOC’s Hatch and Vogtle plants
refers to SNOC’s “insured benefits.”12 Regardless whether
this reference incorporated Hatch’s and Vogtle’s health-care
plans, the two plants were not authorized to unilaterally
modify the health-care OPRBs because their health-care plans
presented in the record do not include a reservation-of-rights
clause.13 Similarly, they were not authorized to modify the
life-insurance OPRBs because the record before us did not
include life-insurance plans for either plant.
12
The agreement says that Hatch’s and Vogtle’s employees would
be covered by “Southern Nuclear Operating Company’s insured
benefits.”
13
Hatch’s and Vogtle’s health-care plans point only to “page 151 of
Your Guide to Benefits for more detailed information about . . . how
the company may change or terminate the Plan.” The record does
not include “page 151 of Your Guide to Benefits.”
15
In summary, APC, GPC, and the Farley plant were
allowed to unilaterally modify their health-care OPRBs, but
Gulf and the Hatch and Vogtle plants were not. None of the
Companies was allowed to unilaterally modify the life-
insurance OPRBs.
IV.
The Companies’ final argument is that APC and the
Farley plant acted lawfully in making their unilateral changes
because System Council U-19, which sought to negotiate with
those plants, had no authority to bargain on behalf of the
plants’ employees.14 Substantial record evidence contradicts
this argument. System Council U-19 is a consortium of the
nine local unions that represent the employees at APC and the
Farley plant. Its bylaws, signed by each of the nine local
unions, give the Council “the authority on behalf of its Local
Unions to deal with the authorized representatives of the
Alabama Power Company as the authorized agent of such
Local Unions in all matters pertaining to collective
bargaining.”15 Indeed, the purpose behind the creation of
System Council U-19 was “to achieve a greater degree of
unity and coordinated action between the several Local
Unions in collective bargaining with the Employer.” There is
no basis for the Companies’ assertion that System Council U-
19 did not have bargaining authority.
14
Although we have already concluded that APC and Farley were
free to modify the health-care OPRBs, this argument is still relevant
with respect to the life-insurance OPRBs.
15
System Council U-19’s bylaws refer only to APC because U-19
was founded before Farley split away from APC in 1991. We have
no reason to believe that the bylaws do not apply to Farley,
especially since Local 796 — which represents Farley’s employees
— is a member of the council.
16
***
For the foregoing reasons, we grant the Companies’
petition for review and vacate the Board’s order with respect
to the modifications to the health-care OPRBs for APC, GPC,
and the Farley plant; we deny the Companies’ petition and
enforce the Board’s order with respect to the modifications to
the health-care OPRBs for Gulf and the Hatch and Vogtle
plants, as well as the life-insurance OPRBs for all the
Companies.
So ordered.