Keystone Steel & Wire, Div. of Keystone Consol. Industries, Inc. v. N.L.R.B.

• Decision Date: 12 September 1979
• Docket Number: No. 78-2215,78-2215
• Citation: 606 F.2d 171
• Parties: 102 L.R.R.M. (BNA) 2664, 87 Lab.Cas. P 11,557 CA 79-3381 KEYSTONE STEEL & WIRE, DIVISION OF KEYSTONE CONSOLIDATED INDUSTRIES, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 171

606 F.2d 171

102 L.R.R.M. (BNA) 2664, 87 Lab.Cas. P 11,557

CA 79-3381 KEYSTONE STEEL & WIRE, DIVISION OF KEYSTONE

CONSOLIDATED INDUSTRIES, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 78-2215.

United States Court of Appeals, Seventh Circuit.

Argued April 17, 1979.

Decided Sept. 12, 1979.

Frederic H. Fischer, Chicago, Ill., for petitioner.

David Fleischer, N.L.R.B., Washington, D. C., for respondent.

Before FAIRCHILD, Chief Judge, and PELL and WOOD, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

The sole issue is whether the change in administrators of a company's hospital, medical and surgical benefits program is a term and condition of employment under the National Labor Relations Act, 29 U.S.C. § 151 Et seq., subject to mandatory collective bargaining.

Keystone Steel & Wire, Division of Keystone Consolidated Industries, Inc., petitions this court to set aside the National Labor Relations Board decision and order, Keystone Steel & Wire, 237 N.L.R.B. No. 91 (1978), which concluded that Keystone, during the term of a collective bargaining agreement and after bargaining with the Independent Steel Workers Alliance, changed without assent the administrator of Keystone's hospital, medical and surgical benefits program breaching the notice provisions of § 8(d)(3) of the National Labor Relations Act and violating § 8(a)(1) and (5) of the Act in refusing to bargain in good faith with the Union. 29 U.S.C. §§ 158(a)(1), 158(a)(5), 158(d)(3). ¹ The Board cross-applied for enforcement of the order.

Keystone, a Delaware corporation, operates a steel and wire mill in Bartonville, Illinois, and employs approximately 2000 maintenance and production employees. Since 1948 these employees have been exclusively represented in collective bargaining with Keystone by the Independent Steel Workers Alliance. The Company and the Union have entered into a series of collective bargaining agreements. The most recent agreement, dated May 1975, is effective until May 1981.

Keystone provides its employees with four different programs of insurance and health care benefits: a life insurance program, sickness and accident weekly benefits for employees unable to work because of non-occupational injuries or illnesses, a dental expense benefits program, ² and a hospital, medical and surgical benefits plan. The current collective bargaining agreement provides that the insurance and health care agreement remains in effect for the term of the collective bargaining contract. ³ Blue Cross-Blue Shield (Blue Cross) was specifically named in the Keystone insurance plan booklet as the administrator of the hospital, medical and surgical benefits plan. See footnote 3. Under the program Keystone advanced funds to Blue Cross to pay the benefits, and Blue Cross charged Keystone an administrative fee equal to a certain percentage of the claims paid. The employees contributed nothing while Keystone assumed the complete financial obligation for paying all benefits for eligible employees. The level of benefits was determined by collective bargaining between Keystone and the Union. Blue Cross initially processed the claims. If Blue Cross denied an employee's claim, the plan required that Blue Cross provide the employee prompt notice of the refusal, written in a comprehensible manner and stating the specific reasons for the denial. The employee could obtain a review of the denial by the Keystone insurance manager or the joint insurance committee, which consisted of Keystone and Union representatives. If the employee's claim was still denied, he could seek relief through legal action.

Keystone's corporate management became concerned about the constantly increasing administrative costs the corporation's various divisions nationwide were paying for the administration of over 30 benefit programs. In November 1976 the Company advised the Union that it was considering a proposal to consolidate all the benefit programs in one administrative company. Keystone estimated that due to differing administrative charges the change from Blue Cross to Metropolitan Life Company would save the Bartonville plant over $100,000 a year. The Company and the Union held meetings and exchanged correspondence through 1977 discussing the proposed substitution of administrators but the parties could not reach an agreement. ⁴ On November 1, 1977, Keystone, after bargaining with the Union, but without the Union's assent, changed the administrator of the hospital, medical and surgical benefits program from Blue Cross to Metropolitan. ⁵ Keystone effected the change, however, without first serving notice pursuant to 29 U.S.C. § 158(d)(3) on the Federal Mediation and Conciliation Service or on the Illinois State Department of Labor of Keystone's desire to modify the collective bargaining agreement with the Union or of the existence of a dispute between Keystone and the Union. Later, the Union filed an unfair labor practice charge against the Company. On November 26, 1977, the General Counsel of the National Labor Relations Board issued a complaint against the Company. In March 1978 a hearing was held before an administrative law judge, and, at the close of the hearing, the parties agreed to waive the judge's decision and submit the matter based upon the record directly to the Board for a decision.

The Board concluded, after comparing the Blue Cross and Metropolitan plans, that the identity of the administrator of Keystone's hospital, medical and surgical benefits program had a vital effect on the terms and conditions of employment of the employees and therefore was a mandatory subject of bargaining. Keystone Steel & Wire, 237 N.L.R.B. No. 91 (1978). For a remedy the Board ordered that Keystone cease and desist from refusing to bargain collectively in good faith with the Union regarding terms and conditions of employment, from making unilateral changes in the identity of the administrator of the hospital, medical and surgical benefits program without first reaching agreement with the Union, and from restraining, coercing or interfering with employees in the exercise of their rights to, among others, organize and bargain collectively. Affirmatively, the Board announced that, if the Union requested reinstatement within a certain time the Company would be ordered to reinstate Blue Cross as the plan administrator.

The National Labor Relations Act, as amended, provides that it shall be an unfair labor practice for an employer to "refuse to bargain collectively with the representatives of his employees." 29 U.S.C. § 158(a)(5). Collective bargaining is defined as "the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment." Id. § 158(d). Those provisions obligate the employer and the employees' representative to bargain with each other in good faith with respect to "wages, hours, and other terms and conditions of employment." Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 210, 85 S.Ct. 398, 402, 13 L.Ed.2d 233 (1964); NLRB v. Wooster Division of Borg-Warner Corp., 356 U.S. 342, 349, 78 S.Ct. 718, 2 L.Ed. 823 (1958).

The task we face is the application of the Section 158(d) phrase, "terms and conditions of employment" to particular circumstances. The legislative history lends us no specific guidance. The Supreme Court commented in Allied Chemical & Alkali Workers, Local 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 178, 92 S.Ct. 383, 397, 30 L.Ed.2d 341 (1971), "Section 8(d) of the Act, of course, does not immutably fix a list of subjects for mandatory bargaining. . . . But it does establish a limitation against which proposed topics must be measured. In general terms, the limitation includes only issues that settle an aspect of the relationship between the employer and employees." (Citations omitted.) See also Fibreboard Paper Products Corp. v. NLRB, 379 U.S. at 220-21, 85 S.Ct. 398 (Stewart, J., concurring). Recently, the Supreme Court observed that the legislative history evidenced a congressional desire to delegate to the National Labor Relations Board the primary responsibility of selecting the subject matters for mandatory bargaining. Ford Motor Co. v. NLRB, --- U.S. ----, ----, 99 S.Ct. 1842, 1848, 60 L.Ed.2d 420 (1979). The Court reasoned:

Because it is evident that Congress assigned to the Board the primary task of construing these provisions in the course of adjudicating charges of unfair refusals to bargain and because the "classification of bargaining subjects as 'terms or conditions of employment' is a matter concerning which the Board has special expertise," Meat Cutters v. Jewel Tea, 381 U.S. 676, 685-686(, 85 S.Ct. 1596, 14 L.Ed.2d 640) (1965), its judgment as to what is a mandatory bargaining subject is entitled to considerable deference. ⁶

Id. Of course, the judgment of the Board remains subject to judicial review.

In Allied Chemical & Alkali Workers, Local 1 v. Pittsburgh Plate Glass Co. the Supreme Court stated, "We agree with the Board that the principle of Oliver ⁷ and Fibreboard ⁸ is relevant here; in Each case the question is not whether the third-party concern is antagonistic to or compatible with the interests of bargaining-unit employees, but whether it Vitally affects the 'terms and conditions' of their employment." 404 U.S. at 179, 92 S.Ct. at 397-398 (emphasis added). Following Pittsburgh Plate Glass, both the Board and Keystone assert on appeal that the applicable test is whether in this case this administrator change "vitally affects" the terms and conditions of employment. Keystone argues that the Board applied the "vitally affects" test inconsistently, sometimes using a "substantial and significant" or a "significant impact" test. If the Board did apply the "vitally affects" test, Keystone's position is that the Board wrongly concluded that the...