564 F.3d 840 (7th Cir. 2009), 08-3517, New Process Steel, L.P. v. N.L.R.B.

Docket Nº:08-3517, 08-3518, 08-3709, 08-3859.
Citation:564 F.3d 840
Party Name:NEW PROCESS STEEL, L.P., Petitioner/Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.
Case Date:May 01, 2009
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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564 F.3d 840 (7th Cir. 2009)

NEW PROCESS STEEL, L.P., Petitioner/Cross-Respondent,


NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner.

Nos. 08-3517, 08-3518, 08-3709, 08-3859.

United States Court of Appeals, Seventh Circuit.

May 1, 2009

Argued April 10, 2009.

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[Copyrighted Material Omitted]

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Sheldon E. Richie, Attorney, argued, Richie & Gueringer, Austin, TX, for Petitioner/Cross-Respondent.

Linda J. Dreeben, Attorney, Ruth E. Burdick, argued, Attorney, National Labor Relations Board Office of the General Counsel, Washington, DC, Rik Lineback, Attorney, National Labor Relations Board, Indianapolis, IN, for Respondent/Cross-Petitioner.

Before BAUER, FLAUM, and EVANS, Circuit Judges.

FLAUM, Circuit Judge.

After negotiating a new collective bargaining agreement with New Process Steel, the owner of a plant in Butler, Indiana, the union representing the employees of that plant took the agreement back to its members. A majority of the union members voted against accepting the contract, which contained substantial take-aways, but an insufficient number voted to strike. So, according to its rules, the union had to accept the contract. New Process then refused to recognize the contract, claiming that in negotiations they had insisted on " ratification" and that the agreement was several votes short of a majority (and thus unratified). The union's members, unhappy about accepting the contract, then petitioned to decertify the union as their exclusive bargaining representative, and New Process withdrew recognition from the union. The union responded by filing unfair labor practices claims with the NLRB for the company's failure to recognize the collective bargaining agreement and deal with the union as the exclusive representative of the plant's employees, and prevailed before the ALJ and the Board. The company now petitions this court, asking us to find that the agreement was invalid, and the NLRB cross-petitions for an order enforcing its decisions.

For the following reasons, we affirm the NLRB's decisions and enter judgment enforcing its orders in full.

I. Background

New Process Steel (New Process or the company) operates four steel processing facilities in the United States, and one in Mexico. In September 2006, the company needed to negotiate a collective bargaining agreement with the employees at its facility in Butler, Indiana. The International Association of Machinists and Aerospace Workers, AFL-CIO, was certified as the exclusive bargaining representative of those employees. On or around September 6, 2006, the two sides sat down to begin negotiations. The company was represented by an attorney, Mike Oesterle, and the plant manager in Butler, Steve Hartz. The record does not reveal who initially led negotiations for the union, but in April 2007 Joseph Chaszar took over as the bargaining representative for the union, and he saw the negotiations through to the end.

The parties met approximately twenty-five times during the course of negotiations, which ran from September 2006 to August 2007, and the company ultimately made about forty-six written counter-proposals. As they agreed on terms, the parties had a practice of signing or initialing tentative agreements, known as " TA‘ ing" a provision. On August 9, 2007, the parties completed their negotiation on the last substantive term, and Chaszar signed the final provision. Chaszar then told the negotiators, " I will agree to your entire proposal" and signed the proposal in its entirety. Chaszar then slid the proposal over to Oesterle, who refused to sign. One of the union representatives angrily demanded, " you [expletive] TA‘ ed everything

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else, why don't you sign off on this so we can get out of here?" Chaszar also asked why the company's representatives refused to sign, given that the parties had previously signed off on all proposals that they had agreed to. Oesterle told the union negotiators that once the contract was ratified the company would sign it. Chaszar said he wanted to hold a union vote that day, but the company insisted that they had production scheduled and the union would " have to do it on your own time." 1 Chaszar scheduled the vote that weekend.

The administrative law judge found that this was the only time the parties verbally discussed the idea of ratifying the contract, and this discussion did not include the form that union ratification should take. The parties had exchanged written documents referencing the idea three times, however. One of those exchanges was in the final proposal: a condition that the wage agreement went into effect " [b]eginning the effective date of this agreement, or on the date the total Agreement is properly ratified, signed and executed, whichever is later...." The employer's initial set of bargaining proposals from October 2006 also provided that, " [i]t is the company's position that these agreements will not become contractually effective until the day and date that a total agreement on all parts of the contract is reached, ratified, and signed by the parties." Finally, in a letter from July 2007 that Oesterle wrote summarizing the progress of negotiations, he again stated that, [t]he company proposes a one-year deal, effective the date the contract is signed, executed, and ratified, whichever is later." However, the letter listed this as an " open" proposal, meaning it was one that the company had offered but that the union had not yet accepted.

The union held its vote on Sunday, August 12 at a local hotel, with about twenty-three employees in attendance (the Butler facility had approximately thirty-two employees total). Cheszar started the vote by explaining how the process would work. First, the employees would vote on the contract. If a majority of the employees did not vote to approve the contract, the union would then take a vote to strike. Union by-laws required a two-thirds vote in order to strike. If the employees did not vote to approve the contract but also did not pass a strike resolution, the union would accept the contract. This procedure, which Cheszar explained at the beginning and end of the meeting, is contained in a printed union circular. The rule has a simple rationale: IAM believes that if employees vote not to accept a contract but also do not pass a resolution to strike for better terms, the union negotiators lack the necessary leverage to negotiate a more favorable agreement and must accept the contract proposal that they have in hand.

After Chaszar outlined the terms, the union conducted a secret ballot vote on the contract. The employees rejected the proposal by a margin of about one or two votes. Chaszar then explained that they were going to take a strike vote, and that a two-thirds majority was needed for that resolution to pass. The strike resolution failed. The union representatives told the employees that the contract was enacted, because the union did not have enough votes to go on strike. Chaszar called New Process later that day and told them they

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had an agreement. New Process' representatives then executed the collective bargaining agreement.

A few days later, Hartz called New Process' CEO at the corporate headquarters in Houston and told him about some employee complaints he had received regarding the manner in which the union accepted the contract. On September 11, 2007, New Process' outside legal counsel sent Cheszar a letter stating that the company was resuming negotiations and did not accept the latest agreement because it had not been ratified by a majority vote. " Since ratification was an express precondition to the agreement," the letter concluded, " it is clear that there is not nor has there ever been a contract between the company and the union." The company informed the union the next day, September 12, that it had received a decertification petition from the employees of the Butler facility and was withdrawing its recognition from the union as a result.

The IAM then filed an unfair labor practices charge with the National Labor Relations Board (NLRB or Board) on September 17, 2007, and the general counsel of the NLRB issued a complaint based on that charge. The NLRB alleged that New Process violated § 8(a)(1) and (5) of the National Labor Relations Act by wrongfully repudiating a valid collective bargaining agreement, and § 8(a)(1) and (5) and § 2(6) and (7) of the NLRA by withdrawing recognition from the union. New Process filed an answer denying all of the allegations. The matter was tried before an Administrative Law Judge who issued findings of fact and conclusions of law with respect to the complaint, ruling that the ratification-by-majority-vote provision that New Process insisted was a condition of the agreement had not been agreed on by both parties and that New Process lacked standing to raise other complaints about the ratification process that the union employed. New Process then appealed the decision of the administrative law judge to the NLRB. The Board adopted the ALJ's findings and conclusions. In a separate decision, the Board also ordered New Process to cease...

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