Colorado-Ute Elec. Ass'n, Inc. v. N.L.R.B.

Decision Date12 July 1991
Docket NumberNo. 111,I,COLORADO-UTE,No. 89-9545,111,89-9545
Citation939 F.2d 1392
Parties137 L.R.R.M. (BNA) 2881, 60 USLW 2107, 119 Lab.Cas. P 10,841 ELECTRIC ASSOCIATION, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, and International Brotherhood of Electrical Workers Localntervenor. National Association of Manufacturers, Amicus Curiae.
CourtU.S. Court of Appeals — Tenth Circuit

Gerard C. Smetana, of Abramson & Fox, Chicago, Ill., and Michael E. Avakian, Center on Nat. Labor Policy, Inc., North Springfield, Va. (James H. Delman, Asst. General Counsel, Colorado-Ute Elec. Ass'n, Montrose, Colo., with them on the briefs), for petitioner-appellant.

Robert F. Mace, Attorney, N.L.R.B. (Barbara A. Atkin, Supervisory Atty., Jerry M. Hunter, General Counsel, Robert E. Allen, Associate General Counsel, and Aileen A. Armstrong, Deputy Associate General Counsel, with him on the brief), Washington, D.C., for respondent-appellee.

Marsha B. Berzon, San Francisco, Cal. (Joseph M. Goldhammer, of Brauer Buescher, Valentine, Goldhammer & Kelman, P.C., Denver, Colo., and James B. Coppess, Washington, D.C., with her on the brief), for intervenor-appellee.

Avrum M. Goldberg, P.C. and Patricia A. Casey, of Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., and Jan S. Amundson, General Counsel and Quentin Riegel, Deputy General Counsel, Nat. Ass'n of Mfrs., Washington, D.C., filed a brief on behalf of Nat. Ass'n of Mfrs., as Amicus Curiae.

Before SEYMOUR, TACHA and BRORBY, Circuit Judges.

SEYMOUR, Circuit Judge.

The National Labor Relations Board (NLRB) held that Colorado-Ute Electric Association (Colorado-Ute or Company) violated section 8(a)(5) and (1) of the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 158(a) (1988), by unilaterally implementing a merit wage plan after impasse. Colorado-Ute appeals the Board's decision and the NLRB cross-appeals for enforcement of the order. We reverse the decision of the NLRB and decline to enforce it.


Colorado-Ute is an incorporated cooperative association which generates and sells electrical energy to member associations throughout Colorado, employing approximately seventy-two office and clerical workers. The International Brotherhood of Electrical Workers, Local No. 111 (Union) is the certified bargaining representative of Colorado-Ute's office, clerical, and plant workers.

The collective bargaining agreement relevant to this dispute, negotiated by the Union and Colorado-Ute, was effective from September 11, 1983 to September 13, 1986. Rec., vol. II, jt. ex. 1, at 29. It provided for hourly wage rates that increased according to an employee's tenure. An employee would receive a raise after a six-month term of employment and yearly thereafter. Id. at app. B. These automatic increases, or "progression steps," would continue until an employee's sixth year of employment. The collective bargaining agreement did not provide wage increases for the employees who had served more than six years with Colorado-Ute. Such employees, therefore, would "top out" of the pay scale at the seventh progression step. Id. Article 32(d) of the collective bargaining agreement provided that during its term "either party may elect to negotiate wages in [the agreement] by giving written notice to the other party." Id. at 30-31. On June 8, 1984, the Union notified the Company in writing that it wished to open the wage progressions set out in Appendix B of the collective bargaining agreement to discuss a "lucrative wage increase for all classifications." Rec., vol. II, jt. ex. 2. Twenty-three bargaining sessions ensued, beginning on July 31, 1984 and terminating on March 27, 1985.

Marlene Joens and Don Shaputis, assistant and senior assistant business managers of the Union, and various unit employees including Joan Deskin Hiss, formerly a steward at Colorado-Ute's Craig facility, bargained on behalf of the Union. John Gibson, manager of personnel and labor relations, assisted by other management representatives, negotiated on behalf of Colorado-Ute. The bargaining history between the Union and Colorado-Ute is detailed below. 1

July 31, 1984

The Union began the first bargaining session by asking for a 9% across-the-board (ATB) wage increase for all job classifications in all pay grades. In the course of the first negotiating session, Gibson indicated that a wage increase was unacceptable because: Colorado-Ute already paid higher wage rates than other businesses in the area and consequently was under pressure not to grant further increases; the progression steps in the Union's contract already provided for guaranteed increases; Colorado-Ute wanted to develop a system of wage increases that would provide for those employees already at the maximum progression step; and there was "only so much money in the pot to spend." Rec., vol. IV, doc. 1, at 5; rec., vol. I, at 276-77. Gibson proposed combining a single wage rate for each job classification with a merit increase. The Union rejected the proposal. The Union stated that the ATB wage increase was negotiable and further suggested that the parties could agree to freeze the current first and second 6-month hire-in rates. The meeting ended with no agreements having been made.

August 14, 1984

Gibson continued to insist upon a merit increase program while the Union continued to propose an ATB wage increase. When the Union asked how the Company planned to implement its merit wage system without favoritism, Gibson did not respond. He replied only that the supervisor's opinion would be the basis for merit increases. The Union pushed for further details by emphasizing that a guarantee of fairness and no disparate treatment was required.

The Union made several of its own wage proposals. It suggested that the Company use "double jumping" to reward employees; that is, reward superior employees by promoting them through the progression steps at an accelerated rate as permitted by the current collective bargaining agreement. The Union next proposed either tying an ATB wage increase to the Company's profit margin or reducing the ATB wage increase to 7%. In conjunction with the 7% proposal, the Union also indicated that it would be willing to freeze hire-in rates. At various times the Union and the Company discussed the progression steps built into the collective bargaining agreement and the fact that they had been negotiated into the contract in previous years. The Company rejected the Union's proposals stating that they were too high and flawed because they were not based on merit.

August 15, 1984

The Union again proposed a 7% ATB increase with a hire-in wage freeze. The Company rejected this proposal and suggested that the parties agree to eliminate progression steps and implement a merit system. The Union indicated that it was opposed to merit increases in general but asked the Company to provide a specific proposal on wage terms.

After a lunch break, the Company handed out a proposal dated August 15. Rec., vol. II, Company Proposal, Aug. 15, 1984. The Company proposed to eliminate the progression steps in the current contract by establishing a fixed minimum, mid-point, and maximum wage rate for each job classification. The proposed minimum rate equalled the current second step rate (i.e., second six-month rate) for each classification. The proposed maximum rate was equal to the top step of each classification with an added increase of 3.9%. 2 Additionally, all employees would receive 60% of their next step increase effective September 9, 1984. Thus, the Company's proposal specifically guaranteed, at a minimum, a higher hire-in rate and wage increase, effective September 9, 1984. It also increased the maximum wage rate employees could receive by 3.9%. In response to the Union's concerns that the merit system would be underfunded, the Company also offered to negotiate a "merit kitty," an amount set aside to be used for wage increases.

The proposal contained over a page of "Merit Increase Performance Guidelines" listing factors by which employees would be evaluated. The record reflects that Gibson stated these factors were only guidelines and that there would be no written merit evaluations. The proposal outlined non-binding guidelines establishing specific ranges for increases that corresponded to whether an employee had been evaluated "more than satisfactory", "satisfactory", and "less than satisfactory". The proposal outlined a schedule for frequency and amount and these were similarly non-binding. Gibson also stated that the frequency and amount of the increases, which were ultimately solely at the discretion of the employer, would also not be subject to the grievance procedure.

August 16, 1984

The bargaining session began with the Union rejecting the Company's August 15 wage proposal. The Union believed increases might not be granted under Colorado-Ute's proposal because there was no money budgeted for increases and because personality conflicts would arise between employees and supervisors who were determining wage merit increases. The Union also questioned to what extent wage increases were guaranteed beyond employees receiving 60% of their next step increase. The Union was specifically concerned with twenty-two of their employees who would be in the top step of their wage progression and would therefore be "at the mercy" of the proposed merit system for further wage increases. Rec., vol. I, at 43. It also feared that the proposal would hinder the grievance system because employees would be hesitant to file complaints against their supervisors who, under the proposed wage system, would be granting the increases. The Union also was concerned that each individual employee would ultimately end up negotiating his or her own wage increase.

Although Colorado-Ute's most recent proposal anticipated some specific terms, the Union continued to press for more specific details concerning the Company's proposal. The Union then offered its own...

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