United Food and Commercial Workers Intern. Union, AFL-CIO, Local 150-A v. N.L.R.B.

Decision Date04 August 1989
Docket NumberAFL-CI,No. 88-1084,LOCAL,88-1084
Citation880 F.2d 1422
Parties132 L.R.R.M. (BNA) 2104, 279 U.S.App.D.C. 349, 112 Lab.Cas. P 11,384 UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION,150-A, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Dubuque Packing Company, Inc., Intervenor.
CourtU.S. Court of Appeals — District of Columbia Circuit

Eugene Cotton, with whom Irving M. King, Chicago, Ill., Robert H. Nichols, and George R. Murphy, Benson, N.C., were on the brief, for petitioner.

David A. Fleischer, Attorney, N.L.R.B., with whom Howard E. Perlstein, Supervisory Atty., and Aileen A. Armstrong, Deputy Associate Gen. Counsel, N.L.R.B., Washington, D.C., were on the brief, for respondent.

Ray J. Schoonhoven, Chicago, Ill., for intervenor.

Before WALD, Chief Judge, and RUTH B. GINSBURG and BUCKLEY, Circuit Judges.

Opinion for the Court filed by Chief Judge WALD.

WALD, Chief Judge:

This case arises out of charges originally filed in 1981 by the United Food & Commercial Workers International Union, AFL-CIO, Local 150-A ("the union"), against Dubuque Packing Company, Inc. ("Dubuque Packing" or "the company") for alleged unfair labor practices. The union accused Dubuque Packing of violating Secs. 8(a)(5) and 8(d) of the National Labor Relations Act ("NLRA" or "the Act"), 29 U.S.C. Secs. 158(a)(5) and 158(d), when the company transferred part of its operations from its home plant in Dubuque, Iowa, to a new plant in Rochelle, Illinois, without engaging in good faith negotiations. The National Labor Relations Board ("NLRB" or "the Board"), summarily affirming the decision and adopting the reasoning of the administrative law judge ("ALJ") who first heard the case, determined that the company had no duty to bargain over its decision to relocate. See Opinion of the Administrative Law Judge ("ALJ op."), reprinted in the Joint Appendix ("J.A.") at 5-99. This decision purported to follow the views expressed by the Board in Otis Elevator Co., 269 N.L.R.B. 891 (1984) ("Otis II "), on the ground that the company's decision to relocate "did not turn upon labor costs but upon the long-term improbability of continuing this work in Dubuque." ALJ op. at 79. After reviewing the record in this case, we conclude that the Board's decision reflects a lack of reasoned decisionmaking. For the reasons that follow, we remand the case for further Board proceedings consistent with this opinion.

I. BACKGROUND

This case focuses on events that transpired in the "hog kill and cut" operations of Dubuque Packing between March and October of 1981, when the company decided to relocate these operations from Dubuque, Iowa, to a newly acquired plant in Rochelle, Illinois. Our analysis, however, hinges on a broader understanding of the events that unfolded at the Dubuque Packing Company during the years prior to and including 1981 in several of the company's departments. In order to assess the merits of the union's claims, it is therefore necessary to set out in some detail the factual background of this case, derived from the ALJ's exhaustive factual findings.

A. Factual Background

The Dubuque Packing Company is a closely-held corporation engaged in meat processing and packaging. The company operated a plant in Dubuque, Iowa, handling beef and pork. During the entire relevant period, the Dubuque plant was covered by a collective bargaining agreement between the company and the union that was initially in effect from September 1, 1979, through September 1, 1982, and which, after being amended on August 26 1980, and October 19, 1981, was extended to September 1, 1983.

The company had been suffering, by all accounts, serious losses since as early as 1977. During the summer of 1978, the company first submitted to the union's executive board a proposal for a "buy-back" of certain contractual entitlements won by the union, under which employees would agree to produce at higher rates in exchange for a one-time cash payment, in order "to counteract 'the excessive cost of [its] wage incentive program' and thereby reduce existing losses and save jobs." ALJ op. at 7. This buy-back was ultimately agreed to by the workers, and it became effective as of November 17, 1978.

In 1979, 1980, and 1981, the financial pressures facing the company intensified. In 1979, for example, the company apparently lost $8 million. On June 10, 1980, Dubuque's assistant corporate director of labor relations sent a letter to the union president informing him, pursuant to a provision in the collective bargaining agreement entitling the union to such notice, that several departments related to beef operations would close effective December 12, 1980. Over the summer of 1980, the parties met concerning these departments. On July 30, company president Charles E. Stoltz addressed union representatives. In his remarks, he treated the decision to move the beef and allied departments as a done deal, but indicated that the company was continuing to review each of the remaining operations to ensure that all possible options were explored to guarantee the future profitability of the Dubuque plant. J.A. at 288. The most immediate problem, he continued, was the future of the company's entire pork operation. As the ALJ put it:

Unless the Company and employees collectively could find some way to stop the tremendous losses incurred on pork in recent years, the Respondent's pork operations would go the same way as its beef operations. In many departments, although the Respondent was paying incentives above the top wages and fringes in the industry, production was less than that of the competition. The Respondent must be able to get top productivity for what it was paying in order to compete.

ALJ op. at 12. In the president's words, "The main problem is the fact that we have to pay a premium to get full production from our employees." J.A. at 288 (emphasis added). Stoltz noted that the company's banks no longer believed the company's promises that it could turn things around to make the Dubuque operation profitable. He then continued:

We can save the plant and its jobs, but it will take surgery to do it. You have to believe me about that. We want to eliminate the incentive plan by November 1, 1980, and make the necessary contract changes to obtain top productivity per man hour for every department in the plant.... If you are willing to work with us and take a positive approach to the matter, we believe that the plant will remain and be profitable. If you take a negative approach ..., then the future of this plant is clear--it will close. The future of this plant and its 2,000 plus jobs will be decided not by management alone but by the concerted action of the management, the Union leadership and the other 2,000 employees.

ALJ op. at 12. The company pressed the union for a decision by September 1, 1980, on its proposal to eliminate incentive pay.

On August 21, 1980, while negotiations were underway, Stoltz sent a written pledge to the union to gain acceptance of the company's proposal. The pledge was offered "[a]s an indication of the Company's belief that this proposal will meet its needs," with a promise that if production levels were maintained, "the Company [would] not request or demand any additional contract revisions during the life of the present labor agreement." ALJ op. at 13.

Shortly after receipt of this letter, the concessions were agreed to, saving the Dubuque plant approximately $5 million annually. ALJ op. at 14.

The next month, September 1980, the supposedly final decision to close the beef kill department was taken up once again at the request of the union. The company responded by raising the issue with its lead bank, reporting to the union that "while [the banks] would not give [the company] a definite answer at this time, they did indicate that they would give it serious consideration providing certain conditions were met." ALJ op. at 15. Stoltz indicated that "one of the problems we would encounter in operating the [beef] kill at Dubuque is a lack of operating capital due to the additional monies now needed for the Illinois operation." Id. On October 29, President Emeritus Robert C. Wahlert expressed his concern to the union over the future of the Dubuque plant on the eve of the elimination of the incentive pay system, noting that this change would "not in itself be a cure-all," but that it was "a big step forward and we are halfway home, but we are still short $4 million just to break even. It is absolutely essential that we work together...." ALJ op. at 15. The company promised to see what it could do to obtain additional capital to maintain the beef operations; and while the company announced that the beef kill would not close as planned in December, it could not promise more than that the beef kill would remain open on a month-to-month basis.

In the ensuing months, the company's banks became increasingly reluctant to extend credit to the company. In December 1980, the company was notified that its consortium of banks was unwilling to extend additional credit to Dubuque Packing, which, as the ALJ pointed out, meant a rejection of a $5 million loan sought by the company to modernize its Dubuque plant, "presenting a major problem to the [company] in continuing at Dubuque." ALJ op. at 69 n. 94. On January 15, 1981, the lead bank called Dubuque Packing's ten-year $10 million loan, but waived default until March 31. ALJ op. at 70 & n. 97. In early 1981, the company sought to increase the chain speed in the hog kill, effectively raising productivity by increasing the speed at which hogs came down the line for processing.

In March 1981, the company maintained that earlier concessions obtained from the union did not suffice to solve the company's financial difficulties. The company therefore again sought to increase the chain speed in the hog kill department by approximately 15%. The union refused to agree to this or...

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