E.I. Du Pont de Nemours

• Decision Date: 26 August 2016
• Docket Number: 09-CA-040777,04-CA-033620,09-CA-041634
• Parties: E.I. Du Pont de Nemours, Louisville Works and Paper, Allied-Industrial, Chemical and Energy Workers International Union and its Local 5-2002 E.I. Du Pont de Nemours and Company and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) and its Local 4-786.
• Court: National Labor Relations Board

364 NLRB No. 113

E.I. Du Pont de Nemours, Louisville Works and Paper, Allied-Industrial, Chemical and Energy Workers International Union and its Local 5-2002 E.I. Du Pont de Nemours and Company and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) and its Local 4-786.

Nos. 04-CA-033620, 09-CA-040777, 09-CA-041634

United States of America, National Labor Relations Board

August 26, 2016

Members Miscimarra, Hirozawa, and McFerran

DECISION AND ORDER

Mark Gaston Pearce, Chairman

We consider these now-consolidated proceedings on remand from the United States Court of Appeals for the District of Columbia Circuit. As directed by the court, we review again the issue whether unilateral changes made by E.I. du Pont de Nemours, Louisville Works and E.I. du Pont de Nemours and Company (collectively, the Respondent) to unit employees' benefit plans after expiration of a collective-bargaining agreement violated Section 8(a)(5) and (1) of the Act. For the reasons set forth in this decision, we reaffirm the Board's prior findings of violations. In doing so, we reaffirm and apply Board precedent that, as the court acknowledged, held that discretionary unilateral changes ostensibly made pursuant to a past practice developed under an expired management-rights clause are unlawful. We likewise adhere to and apply Board precedent defining what constitutes a past practice that an employer must continue as status quo terms and conditions of employment in the absence of a collective-bargaining agreement. To the extent that certain Board decisions cited by the court^[1] conflict with the precedent on which we rely, they are today overruled as ill-advised and unexplained departures from well-established complementary legal principles that are essential to effectuating the Act's fundamental purpose of protecting and promoting the practice of collective bargaining and the rights of employees to fully engage in that practice through their chosen representative.

I. PROCEDURAL BACKGROUND

On August 27, 2010, the National Labor Relations Board issued decisions and orders finding that the Respondent violated Section 8(a)(5) and (1) of the Act by unilaterally changing the terms of the unit employees' Beneflex benefit plan at its facilities in Louisville, Kentucky and Edge Moor, Delaware, after the collective-bargaining agreement for each facility had expired.^[2] The Respondent petitioned for review of the Board's Orders with the United States Court of Appeals for the District of Columbia Circuit, and the Board cross-petitioned for enforcement. On June 8, 2012, the court granted the Respondent's petitions for review, denied the Board's cross-petitions for enforcement, and remanded the cases to the Board for further proceedings consistent with the court's opinion. E.I. du Pont de Nemours & Co. v. NLRB, 682 F.3d 65 (D.C. Cir. 2012). By letter dated October 31, 2012, the Board notified the parties that it had accepted the remand and invited the parties to file statements of position. Thereafter, the Respondent, the Acting General Counsel, and the Charging Party each filed a position statement.

The Board has considered the decisions and the record in light of the court's remand and the parties' statements of position. For the reasons discussed below, we affirm the Board's prior findings that the Respondent violated Section 8(a)(5) and (1) in both cases.^[3]

II. FACTS

The facts of these cases are set out in full in the Board's prior decisions. In brief, the Union has long represented bargaining units of production and maintenance employees at the Respondent's Louisville and Edge Moor facilities. In the 1990s, the Respondent created the company-wide Beneflex Flexible Benefits Plan (Beneflex Plan), a cafeteria-style compendium of numerous individual medical, dental, life insurance, and financial benefit plans, most of which were self-insured. The plan documents contained the following reservation of rights clause:

The Company reserves the sole right to change or discontinue this Plan in its discretion provided, however, that any change in price or level of coverage shall be announced at the time of annual enrollment and shall not be changed during a Plan Year unless coverage provided by an independent third-party provider is significantly curtailed or decreased during the Plan Year

Subsequently, the Union agreed in separate collective-bargaining negotiations that unit employees at the Louisville and Edge Moor facilities would be covered by the Beneflex Plan, including the reservation of rights provi-sion.^[4] Pursuant to the reservation of rights language, the Respondent announced widespread and varied annual changes to the Beneflex Plan in the fall of each year that the contracts were in effect, and it implemented those changes on the following January 1 without objection from the Union. Some of the plan changes recurred regularly. Other changes were made only once or intermittently. The Respondent did not contend, and the record does not show, that it followed any fixed criteria in making these changes.

Following the expiration of the parties' collective-bargaining agreements at Louisville in March 2002, and Edge Moor in May 2004, and while the parties were negotiating successor agreements, the Respondent continued to make numerous annual unilateral changes to the Beneflex Plan.^[5] The Union objected and asserted that bargaining over the changes was required.^[6] At Louisville, the Respondent refused to bargain over the changes, contending that it was not required to do so because it had a past practice of making annual changes when the collective-bargaining agreements had been in effect. At Edge Moor, some bargaining took place, but it is undisputed that the parties were not at impasse when the Respondent implemented the changes. The Respondent did not contend at either location that its post-expiration unilateral changes to Beneflex were compelled by exigent economic circumstances.^[7]

III. THE PRIOR BOARD DECISIONS

In separate decisions for these companion cases, the Board found that the Respondent violated the Act by unilaterally changing the terms of the Beneflex Plan following the expiration of the applicable collective-bargaining agreements, when the parties were negotiating for successor collective-bargaining agreements and were not at impasse. The Board rejected the Respondent's defense that the post-expiration changes to the Beneflex Plan were privileged by past practice. It found that because the ostensible past practice was based on prior changes that were implemented pursuant to a management-rights clause in the contracts (i.e., the Beneflex reservation of rights provision), the Respondent's ability to continue making such changes did not survive the expiration of those contracts. DuPont-Louisville, 355 NLRB at 1084-1086; DuPont-Edge Moor, 355 NLRB at 1096. In both cases, the Board rejected the Respondent's argument that the changes were lawful under the Courier-Journal cases, 342 NLRB 1093 (2004) (Courier-Journal I), and 342 NLRB 1148 (2004) (Courier-Journal II), ^[8] in which the Board had accepted a “past practice” defense to alleged postexpiration unilateral changes to employees' health benefits. The Board distinguished Courier-Journal on the basis that the employer in those cases had established a past practice of making unilateral changes to employees' health care premiums both during the term of the contract and during hiatuses between contracts, indicating that the changes were not made exclusively pursuant to a contractual waiver. DuPont-Edge Moor, 355 NLRB at 1104-1105. The Board reasoned that extending the Courier-Journal decisions to the situation presented here, where the past practice consisted only of changes made during a contract term, “would conflict with settled law that a management-rights clause does not survive the expiration of the contract.” DuPont-Louisville, 355 NLRB at 1085.

IV. THE DISTRICT OF COLUMBIA CIRCUIT'S OPINION

On review, the court concluded that the Board had departed without reasoned justification from Board precedent in finding the unilateral Beneflex changes to be unlawful. E.I. du Pont de Nemours & Co. v. NLRB, 682 F.3d at 68-70. The court accepted the proposition that during negotiations an employer may not unilaterally make discretionary changes to employees' terms and conditions of employment. In this case, however, the court found that the changes at issue were consistent with an established past practice because they were “similar in scope to those [the Respondent] had made in prior years, ” the Respondent's discretion in making the changes was sufficiently limited to the annual enrollment period and, like the employer in Courier-Journal, the Respondent's discretion was constrained by the requirement to treat represented and unrepresented employees alike. Id. at 68. For those reasons, the court held that the Respondent's across-the-board unilateral changes to the Beneflex Plan during the annual enrollment period were lawful under Courier-Journal. Id. at 68-69.

The court rejected the Board's reliance on the factual distinction drawn between the present cases and Courier-Journal: that (as explained), the Respondent's past changes to Beneflex were made only while the contractual reservation-of-rights clauses were in effect whereas in Courier-Journal the employer had made changes during both contract and hiatus periods. Unlike the Board, the court focused on the existence of the past practice itself, finding it immaterial that the practice had its origins in an expired management-rights clause. In support of that approach, the court pointed out that Courier-Journal I specifically stated that the legality of the post-expiration changes did not depend on “whether a contractual waiver of the right to bargain survives the expiration of the contract” but rather rests on...