Land Air Delivery, Inc. v. N.L.R.B., 87-1758

• Citation: 862 F.2d 354
• Decision Date: 02 December 1988
• Docket Number: No. 87-1758,87-1758
• Parties: 130 L.R.R.M. (BNA) 2118, 274 U.S.App.D.C. 127, 110 Lab.Cas. P 10,844 LAND AIR DELIVERY, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 354

862 F.2d 354

130 L.R.R.M. (BNA) 2118, 274 U.S.App.D.C. 127,

110 Lab.Cas. P 10,844

LAND AIR DELIVERY, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 87-1758.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 3, 1988.

Decided Dec. 2, 1988.

David Leightty, with whom Louis J. Amato, Louisville, Ky., was on the brief, for petitioner.

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

Before RUTH BADER GINSBURG and SILBERMAN, Circuit Judges, and MILTON POLLACK, ^* Senior District Judge, United States District Court for the Southern District of New York.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

This is a petition for review of a decision by the National Labor Relations Board. The Board affirmed a finding by an administrative law judge that Land Air Delivery, Inc. violated sections 8(a)(5) and 8(a)(1) of the National Labor Relations Act, 29 U.S.C. Secs. 158(a)(5) & 158(a)(1) (1982), by permanently contracting out bargaining unit work during the course of a strike without notifying and bargaining with the Teamsters Local. The Board also found that Land Air violated sections 8(a)(3) and 8(a)(1) of the Act, 29 U.S.C. Secs. 158(a)(3) & 158(a)(1), by refusing to reinstate strikers, who made an unconditional offer to return to work, in place of new independent contractors. We conclude that the Board's decision was supported by substantial evidence in the record as a whole, and therefore we deny the petition for review.

I.

Land Air Delivery, Inc. is an air freight motor carrier that engages in the pickup and delivery of small packages for overnight carriers. In 1973, the Board certified Teamsters Local 41 as the exclusive bargaining agent of "[a]ll truck drivers and warehousemen" employed by Land Air. In 1975, the Board clarified the bargaining unit by excluding independent contractors who transported freight for Land Air. At the time of the strike that led to this litigation, Land Air employed 13 bargaining unit truckdrivers and used an additional group of independent contractor drivers.

The unit employees were covered by the Teamsters' National Master Freight Agreement ("NMFA"), which was effective from March 1, 1982 to March 31, 1985. The extent of Land Air's use of independent contractors was a major issue in the 1982 negotiations for a new contract. Petitioner presented at least three subcontracting proposals to the union during their negotiations, and the union rejected each one. The union insisted upon the more restrictive subcontracting language provided in Article 32 of the NMFA, which prohibited the subcontracting of work that employees in the bargaining unit performed. The parties eventually reached a bargaining impasse in late 1982 over the subcontracting language (and over an acceptable grievance machinery), and the union struck to enforce its demands. After three days, Land Air agreed to the subcontracting language in the NMFA.

In November 1984, the union notified the company that the union had authorized a strike, pursuant to the terms of the NMFA, to protest both the company's failure to comply with certain grievance awards and its refusal to take a deadlocked grievance to the next step of the grievance procedure. All 13 unit employees struck, and Land Air immediately hired replacement workers. To continue its business during the strike in Kansas City, Land Air used a mix of employees from other locations, its contractors and contractor drivers, newly-hired employees, and its own staff and supervisors. The company hired eight new employees in November and December 1984; three of these employees were terminated in December 1984, and five were terminated on March 28, 1985. Thus, as of March 28, 1985, Land Air had terminated all of its replacement employees.

The company also signed agreements with 12 independent contractors between February 20 and March 1, 1985. Five of these persons had not been contractors before the strike, and all 12 contractors continued to work for Land Air after the end of the strike. Although the exact timing is not clear from the record, the combination of subcontracting on February 20 and March 1 and termination of replacement employees on March 28 resulted in the elimination of all bargaining unit positions by March 1985.

The strike lasted almost five months, until April 1985, and it resulted in violent action by the strikers against replacement workers and company property. During the course of the strike, Land Air filed an unfair labor practice charge against the union stemming from these acts of violence and coercion. On February 4, 1985, the union entered into an informal settlement agreement, which contained a nonadmission clause, and it also issued a Notice to Employees and Members that it would not engage in coercive acts.

The strike ended on April 9, 1985, when the union members offered orally to return to work unconditionally. At that time, the general manager of Land Air informed the former strikers that there was no work for them. On April 11, the union's business agent communicated the same unconditional offer to Land Air by mail. Land Air took no action to reinstate the striking employees, and the union filed a charge against the company alleging that it had committed an unfair labor practice by refusing to reinstate the strikers. The Board's regional director dismissed the charge, finding that "the subject strike was an economic strike giving the employees the right to reinstatement only at such time when positions become available." Because Land Air had not hired any new employees since the unconditional offer of April 9, the regional director concluded that the company's refusal to reinstate the strikers was not a violation of the Act.

After the regional director issued his ruling, the union made several requests for employment information from Land Air. On June 3, the union asked whether the company had hired any new employees since April 1, 1985 or whether any of the work previously performed by the bargaining unit employees was subcontracted as of June 3. Land Air, erroneously stating that the inquiry involved matters relating to a pending case before the Board, ¹ declined to comment on the inquiry. On June 22, the union went back on strike. On July 16, the union's attorney again requested information from the company, this time asking for "the employment status of each and every member with Land Air Delivery, Inc." Land Air responded that it would reply to the request by August 2, but it failed to do so. On August 16, the union's attorney again requested employment information from the company and, for the first time, accused Land Air of subcontracting bargaining unit work without first bargaining with the union.

On August 22, 1985, Land Air's attorney responded to the union's queries. His letter stated that with regard to "putting a label" on the employment status of the persons working for the company, "your guess is as good as mine." He went on to say that during the strike, the company "hired some additional employees as replacements and continued to conduct business as it formerly did prior to the strike." On October 9, 1985, after some further communication with the company, the union filed a charge with the Board asserting that Land Air had violated sections 8(a)(1) and (3) of the Act by, inter alia, "continu[ing] to allow independent contractors or sub-Independent contractors to continue to perform work of the bargaining unit once there was an unconditional offer to return to work." On February 20, 1986, the union filed an amended charge alleging violations of sections 8(a)(1), (3), and (5), and specifying:

On or about February 1, 1985, [Land Air] by its officers, agents and representatives subcontracted out bargaining unit work without notice to or bargaining with the Union.

On or about April 9, 1985, [Land Air] by its officers, agents and representatives failed and refused to reinstate striking employees who had made an unconditional offer to return to work.

The administrative law judge found that Land Air had violated sections 8(a)(1), (3), and (5) of the Act by permanently subcontracting unit work without prior bargaining. He determined that by March 1985, petitioner had contracted out all bargaining unit positions. He ordered the company to reinstate nine strikers and directed that they receive backpay from Land Air (four of the striking employees were not ordered reinstated because of specific instances of employee misconduct). The ALJ rejected the company's claim that the union's charges were barred by the statute of limitations in section 10(b) of the Act, 29 U.S.C. Sec. 160(b) (1982). The Board affirmed the ALJ's findings on these issues, and Land Air petitions this court for review.

II.

Petitioner contends that as a matter of law an employer is entiled to replace economic strikers permanently with subcontractors at any time during the strike without bargaining with the union over that decision. ² The Board, on the other hand, appears to maintain that an employer is never (even during an economic strike) permitted to subcontract permanently, without bargaining over the decision. ³ We reject petitioner's contention, and do not find it necessary, in order to resolve this case, to pass on the Board's proposition. Even if pressing "business necessity" would justify permanently contracting out unit work, Land Air has not shown such necessity here.

Long settled is the rule that an employer--at least absent an economic strike--is obliged to bargain with his union before he decides to subcontract. The basis for this requirement is that subcontracting erodes the bargaining unit and is an "appropriate" subject for collective bargaining. Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct....