CitiSteel USA, Inc. v. N.L.R.B.

• Decision Date: 11 July 1995
• Docket Number: AFL-CI,I,No. 93-1702,93-1702
• Citation: 53 F.3d 350
• Parties: 149 L.R.R.M. (BNA) 2196, 311 U.S.App.D.C. 279, 130 Lab.Cas. P 11,323 CITISTEEL USA, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, United Steelworkers of America,ntervenor. District of Columbia Circuit
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 350

53 F.3d 350

149 L.R.R.M. (BNA) 2196, 311 U.S.App.D.C. 279,

130 Lab.Cas. P 11,323

CITISTEEL USA, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent United Steelworkers of America, AFL-CIO, Intervenor.

No. 93-1702.

United States Court of Appeals,District of Columbia Circuit.

Argued Dec. 12, 1994.

Decided May 5, 1995.

Rehearing and Suggestion for Rehearing

In Banc Denied July 11, 1995. ^*

Kenneth W. Starr, Washington, DC, argued the cause for petitioner. On brief were Kenneth N. Bass, John S. Irving, Jr., and Christopher Landau, Washington, DC.

William Baudler, N.L.R.B., Washington, DC, argued the cause for respondent. On brief were Linda Sher, Acting Associate Gen. Counsel, Aileen A. Armstrong, Deputy Associate Gen. Counsel, and Paul J. Spielberg, Deputy Asst. Gen. Counsel, Washington, DC.

Richard J. Brean, Pittsburgh, PA, argued the cause for intervenor.

Before WILLIAMS, HENDERSON and ROGERS, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge:

CitiSteel USA, Inc. (CitiSteel) petitions for review of an order of the National Labor Relations Board (NLRB or Board) concluding that it is a successor employer at a dormant steel mill it acquired and is thus obligated to recognize the United Steelworkers of America (Steelworkers or union) as the collective bargaining representative for the mill's workers. CitiSteel argues that there is no substantial continuity between the old and new ownership because it made significant changes in both the facility and the product and that the workers did not have, and could not have had, a reasonable expectation of rehire at the mill. We agree that the record does not contain substantial evidence to support the Board's determination and grant the petition.

I. BACKGROUND

The successorship analysis is "primarily factual in nature and is based upon the totality of the circumstances of a given situation." Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43, 107 S.Ct. 2225, 2236, 96 L.Ed.2d 22 (1987). We accordingly must examine in detail the facts found by the Administrative Law Judge (ALJ) and adopted by the Board. In December 1986, new management of the Phoenix Steel Corporation (Phoenix) announced plans to close its plant in Claymont, Delaware and lay off 220 employees. The melt shop closed on December 13 and "thereafter one department after another closed down, with the employees ... laid off until only a skeleton crew remained to perform maintenance and collect scrap for sale to other steel producers." Citisteel USA, Inc., 312 N.L.R.B. 815, 817, 1993 WL 394299 (1993). The rolling mill closed (and all production of steel came to an end) on January 23, 1987. In March 1987, Phoenix made its last shipment of steel and laid off its remaining production and maintenance employees.

The workers, who had been represented by the Steelworkers since 1943, expressed "little hope for the future of the Claymont plant." Id. at 818, 1993 WL 394299. The president of the union local, Walter Brodzinski, arranged for the Delaware Department of Labor to conduct a series of job search workshops between February and April. Soon afterward, Brodzinski resigned his union position and himself obtained employment outside the state. "Certain employees concluded from [his] exit that he would not have left if there were a reasonable chance that the plant was going to reopen in the near future." Id. In March, the Steelworkers' national president placed the Claymont mill local under an administrator and relieved its remaining officers of their duties. The union nonetheless remained active through its national office in efforts to obtain job training and benefits for the workers, represented them in connection with claims against Phoenix and stayed abreast of the mill's prospects. ¹ It also met with possible buyers to discuss potential terms of a collective-bargaining agreement.

Beginning before the closure and throughout 1987, a number of investors approached Phoenix about acquiring the Claymont mill or its assets. Local newspaper articles reporting the negotiations "raised the hopes, if not the expectations, of the jobless" when prospects were good, id., and dashed them with headlines such as "For steel workers, the death blow finally comes," when prospects were bad. Bob Bauers, Wilmington News--J., Nov. 26, 1987, at A19 (reprinted in JA 1738). Phoenix's efforts to sell the mill finally appeared successful in December 1987, when Hong Kong investor L.H. Chang of Wai Hing & Company offered to buy it for $13 million and Phoenix accepted. Difficulties arose, however, when it was revealed that Chang's tentative financial backing came from CITIC, an instrumentality of the People's Republic of China. The U.S. Department of Defense, as well as the U.S. Department of Commerce and members of Congress, expressed reservations that sensitive technology might fall into the hands of the Chinese government. Other problems followed when environmental groups and Phoenix's creditors expressed concern over the proposed sale and when Chang was unable to obtain adequate financial support from CITIC. All of the potential obstacles were resolved in early 1988 and the sales agreement was finalized in April. The sale was completed after the Delaware legislature amended the state's Coastal Zone Act to permit CitiSteel to operate the Claymont mill in an otherwise restricted area.

On June 1, 1988 Chang assigned his interest in the Claymont mill to CITIC, which had already formed a new corporation, CitiSteel, to operate the facility. CitiSteel immediately began work on refurbishing and modernizing the plant, continuing into 1989. It spent $25,000,000 on the effort, converting Claymont from a "specialty mill" producing a number of different low-volume, high-cost steels for specific uses to a "minimill" using technologically advanced equipment to mass produce a few types of steel at high volume and low cost. CitiSteel indicated that it planned to begin with about 100 workers and build to a complement of 300 to 350 workers to produce the same amount of steel formerly manufactured by 600 to 1000 people. The plant also required extensive renovation to restore its facilities and equipment to operating condition after two years of inactivity.

The union contacted CitiSteel in September 1988 to demand recognition as the collective bargaining representative for employees of the Claymont mill. CitiSteel was noncommittal and placed recruiting advertisements in newspapers for production and maintenance employees. The union urged former Phoenix employees to apply, asserting that it would represent them if a majority of CitiSteel's new employees consisted of former Phoenix employees. The plant resumed limited production in February 1989, more than two years after Phoenix had stopped manufacturing steel. By April, the plant employed 124 production and maintenance workers, the majority of whom had been employed by Phoenix.

The former Phoenix employees returned to find that CitiSteel had modified the organization of the mill's workers, primarily by reducing the number of job classifications. CitiSteel's chief executive officer testified that the object of the change was "to enrich job content and broaden the responsibility of each job position." 312 N.L.R.B. at 826, 1993 WL 394299. CitiSteel employees now performed several functions, many of which had been covered by a separate job classification at Phoenix. ² To facilitate the change, CitiSteel provided formal "cross-training" sessions to the employees. It "encouraged each employee with a special skill to learn other skills so that if he were faced with a problem which is not strictly within the parameters of his expertise, he would be able to solve the problem himself rather than seek the aid of another employee." Id. CitiSteel also fused into a single entity the management of the production and maintenance crews, which under Phoenix had been run as separate operations with different priorities. Further, in line with the expansion of the workers' job content at CitiSteel, production workers could now be assigned to maintenance jobs.

The changes also reduced the level of supervision received by the CitiSteel workers. The ALJ noted testimony that "rank and file employees at CitiSteel are performing duties that had been performed by supervisors at Phoenix." Id. at 824, 1993 WL 394299. One CitiSteel employee who had worked for Phoenix testified during the administrative proceedings that his CitiSteel job is "a lot more extensive. You have a lot more responsibilities." Id. Another worker testified that his Phoenix supervisor "would assign you the job for the night, and then whatever incidental repairs, he would come and tell you ... such and such a thing needs to be fixed, go and get that." Id. The same employee said that at CitiSteel "[w]e don't have anybody [supervising]. We've got two electricians on a tour and two mechanics." Id. Moreover, the supervisors themselves took on additional tasks. The ALJ found that "whereas at Phoenix, supervisors were generally prohibited from performing unit work, at CitiSteel, there are no such restrictions and supervisors are encouraged to perform any work that will get the job done." Id. at 827, 1993 WL 394299.

Shortly after the Steelworkers renewed its demand for recognition in December 1988, CitiSteel responded by letter that CitiSteel was not a successor to Phoenix and that CitiSteel would not recognize the union as the collective bargaining representative of the Claymont workers. In February 1989, the Steelworkers filed unfair labor practice charges against CitiSteel, charging that CitiSteel had violated sections 8(a)(1), 8(a)(3) and 8(a)(5) of the National Labor Relations Act (NLRA), 29 U.S.C. Secs. 158(a)(1), 158(a)(3), 158(a)(5), by refusing to recognize and bargain with it as the representative of the workers. The parties settled most of the charges but...