682 F.3d 537 (7th Cir. 2012), 10-3300, N.L.R.B. v. KSM Industries, Inc.

Docket Nº:10-3300.
Citation:682 F.3d 537
Opinion Judge:WOOD, Circuit Judge.
Party Name:NATIONAL LABOR RELATIONS BOARD, Petitioner, v. KSM INDUSTRIES, INC., Respondent. and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, Intervening-Petitioner,
Attorney:Linda Dreeben, Amy H. Ginn (argued), Attorneys, National Labor Relations Board Office of the General Counsel, Washington, DC, Irving E. Gottschalk, Attorney, National Labor Relations Board, Milwaukee, WI, for Petitioner. Kevin J. Kinney (argued), Attorney, Krukowski & Costello, Milwaukee, WI, for...
Judge Panel:Before ROVNER, WOOD, and WILLIAMS, Circuit Judges.
Case Date:May 22, 2012
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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682 F.3d 537 (7th Cir. 2012)



United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, Intervening-Petitioner,



No. 10-3300.

United States Court of Appeals, Seventh Circuit.

May 22, 2012

Argued Sept. 20, 2011.

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Linda Dreeben, Amy H. Ginn (argued), Attorneys, National Labor Relations

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Board Office of the General Counsel, Washington, DC, Irving E. Gottschalk, Attorney, National Labor Relations Board, Milwaukee, WI, for Petitioner.

Kevin J. Kinney (argued), Attorney, Krukowski & Costello, Milwaukee, WI, for Respondent.

Marianne G. Robbins (argued), Attorney, Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, Milwaukee, WI, Joseph P. Stuligross, Attorney, United Steelworkers of America Legal Department, Pittsburgh, PA, for Intervening-Petitioner.

Before ROVNER, WOOD, and WILLIAMS, Circuit Judges.

WOOD, Circuit Judge.

The present case arose against the backdrop of an order from the National Labor Relations Board finding that KSM Industries violated sections 8(a)(3) and (1) of the National Labor Relations Act, 29 U.S.C. § 158(a)(3) and (1), when it denied or delayed the recall of certain employees after their participation in an unfair labor practices strike. See KSM Indus., Inc., 336 N.L.R.B. 133 (2001), motion for reconsideration granted in part on other grounds, 337 N.L.R.B. 987 (2002). After further proceedings, the Board ordered KSM to pay specific amounts of backpay to 42 affected employees. (See Appendix to this opinion.) It now petitions this court to enforce that order. KSM challenges the Board's findings on 11 employees for lack of substantial evidence. As KSM offers no argument with respect to the other 31 employees, we enforce the Board's order summarily with respect to them. The employees' union intervened to defend the Board's order. We also grant the Board's petition for enforcement for the 11 employees for which KSM has raised objections.


The Administrative Law Judge (ALJ) and the Board wrote thorough decisions that provide extensive detail about this saga, so we have no need to repeat everything here. KSM Indus., Inc. and United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union Local 2-779, AFL-CIO, 353 N.L.R.B. No. 117 (2009). A brief account of the salient facts will suffice.

KSM's current liability arose out of its failure fifteen years ago to reinstate its strikers after the employees' union made an unconditional offer to return to work on October 5, 1997. In 2001, the Board ruled that KSM's conduct with respect to recalls violated the labor laws, and it ordered backpay as a remedy. 336 N.L.R.B. 133 (2001). The parties entered into a partial settlement agreement on October 3, 2006, but further progress was not forthcoming. The ALJ attempted to wrap matters up with a remedial order entered on September 27, 2007, but by the time this order reached the Board, the Board had shrunk to two sitting members, who attempted to resolve it. At that point, the case was held up for a year and a half by New Process Steel, L.P. v. NLRB, __ U.S. __, 130 S.Ct. 2635, 177 L.Ed.2d 162 (2010), which ultimately held that the Board could not act without a minimum of three members. After the Board once again had the necessary quorum, it issued a Second Supplemental Decision and Order in September 2010 requiring KSM to compensate 42 former striking employees with backpay totaling in the aggregate $383,461.11. That is the order now before us.


Our review of the Board's decision is subject to a deferential standard. Loparex LLC v. NLRB, 591 F.3d 540, 545 (7th Cir.2009). Our task is not to reweigh

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the evidence; it is only to determine whether there is evidence in the record supporting the Board's outcome that could satisfy a reasonable fact finder. NLRB v. Midwestern Pers. Serv., 508 F.3d 418, 423 (7th Cir.2007). We owe " particular deference to the Board's credibility determinations, which we will disturb only in extraordinary circumstances." FedEx Freight East, Inc. v. NLRB, 431 F.3d 1019, 1026 (7th Cir.2005) (quoting Ryder Truck Rental v. NLRB, 401 F.3d 815, 825 (7th Cir.2005)). We similarly defer to the Board's interpretations of the law " unless they are irrational or inconsistent with the Act." Loparex, 591 F.3d at 545. In a case like this one, where the Board adopted the majority of the ALJ's findings, we apply the same standards to the ALJ's findings and opinions to the extent that the Board has adopted them as its own. Id.

In the face of these deferential standards, KSM has offered a number of reasons why, in its view, we should deny enforcement to the Board's order. Initially it argues that the Board denied it due process because the Board made its decision too quickly. This may strike the reader as odd, given the fact that the case (if it were a child) has gone from birth to high school, but KSM's focus is more narrow. KSM sought review of the original Supplemental Decision and Order issued by the two-person panel on March 26, 2009, 353 N.L.R.B. 1124 (2009), in the D.C. Circuit. Id. That court, however, suspended its ruling pending the Supreme Court's decision in New Process Steel, which raised the question whether the Board was empowered to act through only two members. The Supreme Court answered this question in the negative, holding that two Board members cannot constitute a statutory quorum (even though a three-person Board might act by a vote of 2-1). This had the effect of setting aside a great number of decisions, including the 2009 ruling in this case. The Board sought expedited issuance of the remand from the D.C. Circuit, and that court obliged with an order dated September 29, 2010. The Board issued its Second Supplemental Decision and Order the following day, on September 30. KSM alleges that the speed with which the Board issued its second decision after the remand proves that the Board failed properly to review the matter.

Whatever one might think of the Board's one-day turnaround is, unfortunately for KSM, beside the point. We lack authority to reach the merits of this argument because KSM did not raise it before the Board. 29 U.S.C. § 160(e); 29 C.F.R. § 102.48(d)(1), (2) (moving party has 28 days after the Board issues its decision to request reconsideration). Section 160(e) states, " No objection that has not been urged before the Board ... shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances." KSM has not suggested any reason why we should find the requisite extraordinary circumstances. NLRB v. Dominick's Finer Foods, Inc., 28 F.3d 678, 686 (7th Cir.1994) (explaining that " extraordinary circumstances" under § 160(e) exist " only if there has been some occurrence or decision that prevented a matter which should have been presented to the Board from having been presented at the proper time" ).

We add that even if we thought that KSM's forfeiture of this point was excused, its underlying argument is without merit. The pendency of New Process Steel was hardly a secret, and for all we know the Board was already busy taking another look at the cases that were potentially affected by it. KSM has offered no evidence to show that the Board failed to

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fulfill its obligations. It takes much more for us to intervene than a disappointed party's hunch that the Board gave a cursory review to its case.


We now turn to KSM's assertion that the Board improperly awarded backpay to 11 employees. KSM takes issue with the Board's conclusion that certain employees who quit in order to obtain access to their 401(k) funds did not intend permanently to abandon employment and thus are owed backpay. It also challenges the Board's findings that certain employees adequately searched for and attempted to secure interim employment.



The first question presented is whether five striking employees who resigned during the strike because they needed to gain access to their 401(k) accounts— to whom the parties refer as the " 401(k) quits" — were properly awarded backpay by the Board. This is important because if a striker intends permanently to abandon his employment when he resigns during a strike, the employer may avoid backpay liability. L.B. & B. Assoc., Inc., 346 N.L.R.B. 1025, 1029 (2006). KSM challenges the Board's finding that Anthony Bannenberg, Alan Resch, and Michael Bartelt did not intend permanently to abandon their employment when they resigned. KSM also argues that Robert Graf and Douglas Wiedeman, both of whom resigned after the strike, also intended permanently to abandon their employment.

The Board announced its legal standard for 401(k) quits who resign during a strike in Augusta Bakery Corp., 298 N.L.R.B. 58 (1990), enforced 957 F.2d 1467 (7th Cir.1992); since that time, it has adhered to that decision. L.B. & B. Assoc., Inc., 346 N.L.R.B. at 1029. An employer bears the burden of producing " unequivocal evidence" of a striker's intent to " permanently sever" the employment relationship, if it wishes to establish abandonment and thus to avoid backpay liability. Augusta Bakery, 957 F.2d at 1474-75 (quoting Harowe Servo Controls, 250 N.L.R.B. 958, 964 (1980)). For 401(k) quits, the Board weighs the following factors: whether (1) the striking employees could obtain their retirement contributions only by quitting; (2) they continued to participate in the strike after they resigned; (3) they credibly testified to economic stress; (4) they did not have other employment when they resigned; and (5) they did not tell their employer...

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