200 F.3d 436 (6th Cir. 1999), 97-5223, Loral Defense Systems v National Labor Rel

Docket Nº:97-5223, 97-5224
Citation:200 F.3d 436
Party Name:Loral Defense Systems-Akron, Division of Loral Corporation; Aircraft Braking Systems Corporation, Petitioners/Cross-Respondents, v. National Labor Relations Board, Respondent/Cross-Petitioner, International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW); Local 856, International Union, United Automobile, Aeros
Case Date:December 08, 1999
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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200 F.3d 436 (6th Cir. 1999)

Loral Defense Systems-Akron, Division of Loral Corporation; Aircraft Braking Systems Corporation, Petitioners/Cross-Respondents,


National Labor Relations Board, Respondent/Cross-Petitioner,

International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW); Local 856, International Union, United Automobile, Aerospace And Agricultural Implement Workers, Intervenors.

Nos. 97-5223, 97-5224

United States Court of Appeals, Sixth Circuit

December 8, 1999

Argued: August 5, 1999

Rehearings En Banc Denied Feb. 17, 2000

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On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board. Nos. 8-CA-25507; 8-CA-25508; 8-CA-25765.

Edward C. Kaminski, AMER, CUNNINGHAM & BRENNAN, Akron, Ohio, Carol MacKenzie, PEARL & MacKENZIE, Syosset, New York, for Petitioners.

John D. Burgoyne, Julie B. Broido (argued and briefed), Margaret Ann Gaines (briefed), Washington, D.C., for Respondent in No. 97-5223.

Aileen A. Armstrong, Julie B. Broido, NATIONAL LABOR RELATIONS BOARD, APPELLATE COURT BRANCH, Washington, D.C., Margaret Ann Gaines, NATIONAL LABOR RELATIONS BOARD, Washington, D.C., for Respondent.

Jordan Rossen, Associate General Counsel, Detroit, MI, David Roloff, Goldstein & Roloff, Cleveland, OH, Stephen A. Yokich, CORNFIELD & FELDMAN, Chicago, Illinois, for Intervenors.

Before: NELSON and MOORE, Circuit Judges; ROSEN, District Judge.[*]


ROSEN, District Judge.

Petitioners Loral Defense Systems-Akron ("Loral") and Aircraft Braking Systems Corp. ("Aircraft") petition for review of the Decision and Order of the National Labor Relations Board (the "NLRB") finding that they violated Section 8(a)(5) of the National Labor Relations Act (the "Act"),19 U.S.C. § 158(a)(5), by unilaterally changing health care plans covering employees represented by the UAW. The NLRB cross-petitions for enforcement of its Order1. For the reasons stated below, we deny Loral's and Aircraft Braking Systems'

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Petition and grant the Board's Cross-Petition for enforcement.


In 1988, Loral and the UAW entered into a collective bargaining agreement ("CBA") which took effect on November 1, 1988. At the time that this first CBA was negotiated, Aircraft was a division of Loral and as a consequence, employees of both entities were covered by the same Agreement. Subsequently, Aircraft was severed from Loral and became an independent corporate entity.

The 1988 collective bargaining agreement covering Loral and Aircraft employees was to expire by its own terms on August 10, 1991. In order to enable it to negotiate its own contract, Aircraft filed a unit clarification petition with the NLRB. On July 26, 1991, the Board issued an order determining that the single collective bargaining unit was no longer appropriate in light of the new organizational structure of the companies and, accordingly, created separate units for the Aircraft and Loral employees. Aircraft and Loral continued to recognize the UAW as the exclusive bargaining representative of each unit. Further, both companies continued to operate under the 1988 CBA until its expiration date on August 10, 1991.

Both Loral and Aircraft engaged in contract negotiations with the union prior to the expiration date but were unable to reach agreements. On August 10, 1991, Aircraft unilaterally implemented its final contract offer. Loral continued to negotiate with the union after the August 10 expiration date, but the Loral negotiations also reached an impasse and on October 14, 1991, Loral implemented its final offer.

As implemented, Loral's final offer contained a provision to provide for "medical benefits under the 80/20 Option of the Comprehensive Medical plan." The agreement also provided that the "Medical Necessity" plan (the plan provided under the expired 1988 CBA) would be terminated. The Comprehensive Medical Plan contained the following provision:

The Employer reserves the right to amend or modify any part of this [i.e., the Comprehensive Medical] Plan, including employee contributions or Drug Copayments, but will not do so unless the Plan is likewise amended or modified for non-Bargaining Unit Employees.2

Loral's reservation of the right to amend or modify the Comprehensive Medical Plan was opposed by the Union.

On April 2, 1992, the Union wrote a letter to Leonard Laden, Loral's President, advising him that the Union "stands ready to continue negotiations" for a mutually acceptable collective bargaining agreement. Pursuant to that letter, on July 16, 1992 Loral entered into a Memorandum of Agreement with the Union in which the parties agreed to meet for a period of 15 days for "clarification purposes only" concerning eleven listed subjects with the understanding that "[i]f clarification is reached between the Company and the Union with regard to the eleven items, the implemented contract shall be supplemented to reflect such clarification and the Union's bargaining committee shall unanimously recommend ratification of such modified agreement to the members of Local 856 of the Company." [See J.A. p. 173.] The list of items to be covered in these discussions included

Changes to Comprehensive Medical during life of agreement; amount of contributions for comprehensive medical;

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contributions by retirees for Comprehensive Medical; and reimbursement for Medicare.

[See J.A. p. 173, Memorandum of Agreement, § 1(A) (II).]3

Gregory Myer, Loral's Director of Human Resources, met with the Union in these re-opened discussions. At the hearing before the ALJ, Myer testified that the Union "requested that we consider our position on [reserving the right to make] changes to comprehensive medical health plan during the life of the agreement." [J.A. p. 137.] When asked what he told the Union, Myer stated,

"I told them that that was something that we were unable to do, was the reason that we came to loggerheads so drastically in it, during the original negotiations. It [i.e., the right to amend or modify the plan] was something that we needed to keep open to us."

Id. No agreement was ever reached on any of the subjects.

On January 29, 1993, both Loral and Aircraft announced to the Union that effective May 1, 1993, the health care benefits plan for union employees would be changed from the Comprehensive Medical Plan set forth in the implemented proposals to the Aetna Managed Choices Plan.4 Greg Myer made Loral's formal announcement in a brief meeting with the Union bargaining committee members that day. At the hearing before the ALJ, Union representatives Gregory Megois and David Terry testified that at that January 29 meeting, Myer told them that the medical benefits change was "corporate wide" and "not open for negotiations," and "there was

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nothing anybody at the facility could do" about it. [See J.A. pp. 112, 128.]5

Aircraft's Director of Human Resources, Edward Searle, first met with members of the Union's executive bargaining committee on December 17, 1992 to advise them of the soon-to-be announced change in medical benefits; he then met with Union representatives again on December 21 and January 28 or 29, 1993.6 Union representatives Gregory Megois, David Terry and Don Hurr all testified that when Searle met with them, he told them that the change in health care benefits "came from headquarters" [J.A. pp. 45-8], that he was "not [t]here to negotiate" with them, [J.A. pp. 46, 68, 75], and that he had "no control over the situation." [J.A. p. 75.]7

The Union protested the companies' announcement of the unilateral change in health care plans. [J.A. pp. 68, 169.]8 Notwithstanding the Union's protest, on May 1, 1993, Loral and Aircraft implemented the change from Comprehensive Medical to Managed Choices. On June 7, 1993, the Union filed unfair labor practice charges against the companies. [J.A. pp. 171, 299.]


Based upon the testimony and exhibits in the administrative proceedings9 of this matter, the following charts show the differences between the Aircraft's and Loral's Comprehensive Medical Plan and the Managed Choices Plan:

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---------------------------------------------------------------- | TERMS | COMPREHENSIVE | MANAGED | MANAGED | | | | CHOICES | CHOICES | | | | IN | OUT OF | | | MEDICAL | NETWORK | NETWORK | |--------------|-----------------|---------------|---------------| | CHOICE OF | ANY | LIMITED TO | ANY | | DOCTORS/ | (PATIENT'S | DOCTORS/ | (PATIENT'S | | HOSPITALS | CHOICE) | HOSPITALS | CHOICE) | | | | IN NETWORK; | | | | | SPECIALISTS | | | | | ONLY AS | | | | | REFERRED | | | | | BY PRIMARY | | | | | IN-NETWORK | | | | | PHYSICIAN | | |--------------|-----------------|---------------|---------------| | DEDUCTIBLE | $200 PER | NONE (PAY | $500 PER | | | PERSON; | ONLY $15 | PERSON; | | | $600 FOR | PER | $1500 FOR | | | FAMILY | OFFICE | FAMILY | | | OF 3 OR | VISIT) | OF 3 OR | | | MORE | | MORE | |--------------|-----------------|---------------|---------------| | COPAYMENT | AFTER | NONE (PAY | AFTER | | | DEDUCTIBLE | ONLY $15 | DEDUCTIBLE | | | IS SATISFIED: | PER | IS SATISFIED:| | | 20% UP TO | OFFICE | 30% | | | CO-PAY | VISIT) | | | | MAXIMUM | | | ---------------------------------------------------------------- Page 444

---------------------------------------------------------------- | PRESCRIPTION | $4.00 FOR | $5.00 PER | 20% OF | | DRUG CO- | GENERIC | GENERIC | THE PRICE | | PAYMENT | DRUGS; | DRUGS; | OF | | | $6.00 FOR | $5.00 PLUS | GENERIC | | | BRAND-NAME | DIFFERENCE | DRUGS; | | | DRUGS | BETWEEN | FOR | | | | COST OF | BRAND-NAME | | | | GENERIC | DRUGS, | | | | AND | 20% OF | | | | BRAND-NAME | THE PRICE | | | | FOR BRAND- | OF THE | | | | NAME DRUGS | BRAND-NAME | | | | | DRUG | | | | |...

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