McClatchy Newspapers, Inc. v. N.L.R.B.

Decision Date19 December 1997
Docket NumberNo. 96-1399,No. 97-1111,96-1399,97-1111
Citation131 F.3d 1026
Parties157 L.R.R.M. (BNA) 2023, 327 U.S.App.D.C. 372 McCLATCHY NEWSPAPERS, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Northern California Newspaper Guild, Local 52, Intervenor. ; Consolidated with
CourtU.S. Court of Appeals — District of Columbia Circuit

On Petitions for Review and Cross-Applications for Enforcement of Orders of the National Labor Relations Board.

Jeremy P. Sherman argued the cause and filed the briefs for petitioner.

David S. Habenstreit, Supervisory Attorney, National Labor Relations Board, argued the cause for respondent, with whom Linda R. Sher, Associate General Counsel, and Aileen A. Armstrong, Deputy Associate General Counsel, were on the brief.

James B. Coppess argued the cause for intervenor Northern California Newspaper Guild, Local 52, with whom Barbara Camens, Marsha S. Berzon, and Laurence S. Gold were on the brief.

Gerard C. Smetana was on the brief for amicus curiae Council on Labor Law Equality.

Before: SILBERMAN, ROGERS, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

This dispute encompasses two cases, one involving McClatchy's Sacramento newspaper and the other its Modesto newspaper. In both cases, the National Labor Relations Board found that McClatchy committed an unfair labor practice by unilaterally implementing a discretionary merit pay proposal, even though McClatchy had bargained to impasse over the proposal with the union. In the Modesto case, the Board also found that McClatchy had threatened its employees with discharge for engaging in a protected activity. McClatchy petitions for review of the orders, and the Board cross-petitions for enforcement. We enforce the Board's Sacramento order, and partially enforce the Board's Modesto order.


At the Sacramento Bee, the Northern California Newspaper Guild, Local 52 represents editorial, advertising, and telephone switchboard employees. McClatchy's most recent collective bargaining agreement with the union, which expired in 1986, set pay through a combination of wage scales and discretionary merit raises. The agreement defined 28 job classifications, each setting a minimum salary that automatically increased with each year of experience. Once an employee reached the maximum salary for his or her classification, raises were based solely on merit, as determined by the company. McClatchy retained full discretion over the timing and amount of these merit raises, and its decisions were excluded from the contractual grievance and arbitration procedure. Within 10 days of performing a merit evaluation, McClatchy would notify the union of the result, and the union then could make nonbinding comments and participate in the appeals process at the employee's request.

When the 1986 agreement expired, McClatchy and the union each proposed a new wage system. From the outset, their proposals were diametrically opposed: McClatchy wanted to move to a system based entirely on its determination of merit; the union wanted to eliminate the merit system altogether. McClatchy's final offer proposed to grandfather current employees earning less than their classification's maximum, but this plan only superficially preserved the old wage scales. Ninety percent of the employees were already at the top salary step in their class, so the offer kept most raises in McClatchy's complete discretion. And, since the 1986 scales were out of step with the cost of living, salaries for the remaining 10% would effectively be determined by the publisher's discretion as well.

The parties bargained in good faith, but ultimately deadlocked over wage terms for the new agreement. Following impasse, McClatchy asserted that it was implementing its final offer and began granting increases to employees without consulting the union. Under the terms of McClatchy's proposal--as was true under the 1986 agreement--the union's role was restricted to making nonbinding comments and participating in the appeal process only if asked by the employee. The union filed an unfair labor practice charge against McClatchy, alleging that implementing "merit" increases without the union's consent violated McClatchy's duty to bargain with the union over wages.

Before the Board resolved the union's Sacramento complaint, petitioner reached an impasse with the union over a similar discretionary pay proposal for its Modesto Bee editorial staff. The only difference in the Modesto proposal was that it fixed the timing of merit increases. At the Sacramento Bee, McClatchy could consider employees for increases as frequently or infrequently as it wished, but at the Modesto Bee, increases were tied to the annual review process. As it had in Sacramento, petitioner implemented its final offer after impasse and gave raises to some employees. The union filed a second unfair labor practice charge against McClatchy, and included an allegation that McClatchy had threatened the Modesto employees with discharge for engaging in protected activity. Petitioner had posted a copy of its final offer, with a cover memorandum noting that, in the absence of agreement, the final offer set the terms and conditions of employment. Because the posted offer included a no-strike/no-picketing clause, the union complained that the posting was a veiled threat to employees.

The Board considered the Sacramento case first. The General Counsel argued that because McClatchy had a statutory obligation to bargain over "wages, hours, and terms of employment," granting individual raises without consulting the union violated the National Labor Relations Act. McClatchy maintained that it had satisfied that duty by bargaining to impasse over the discretionary pay proposal. Once it had exhausted the bargaining process by reaching impasse, McClatchy asserted, it was privileged to implement its "last, best, and final offer" over the union's objection. Relying on its decision in Colorado-Ute Electric Association, 295 N.L.R.B. No. 67, 1989 WL 224193 (1989), enf. denied, 939 F.2d 1392 (10th Cir.1991), the Board rejected McClatchy's defense. In the Board's view, this case was less about impasse than statutory waiver: an employer who proposes unlimited management discretion over wages is really proposing that the union waive its statutory right to be consulted about wage changes. That is fine, the Board reasoned--if the union agrees. But impasse, by definition a lack of agreement, could not substitute for consent. Without a waiver, nothing relieved McClatchy of its obligation to bargain with the union before changing any employee's pay; unilaterally granting merit increases, therefore, was an unfair labor practice. McClatchy Newspapers, Publisher of The Sacramento Bee, 299 N.L.R.B. No. 156, 1990 WL 155359 (1990).

The Board petitioned for enforcement of its order. The majority of the court, in a per curiam opinion, held that the Board's decision did not constitute reasoned decisionmaking. NLRB v. McClatchy Newspapers, Inc., 964 F.2d 1153 (D.C.Cir.1992). The three judges wrote separate opinions, however, each expressing a somewhat different view of the Board's approach. Judge Henderson essentially agreed with the Tenth Circuit's view, expressed in Colorado-Ute, that the Board simply could not square its approach with governing precedent under the NLRA. Judge Silberman thought that the issue the Board faced was novel and that the Board's waiver theory might well be a legitimate interpretation of the Act if adequately explained. Chief Judge Edwards believed that the Board's waiver theory would not work, but that it might be possible to articulate a limited exception to the impasse doctrine that would cover this situation. He pointed out that the employer's bypassing the union in setting wage rates could be seen as a kind of de-collectivization of bargaining. Id. at 1173. Chief Judge Edwards and Judge Silberman agreed to remand to the Board for further consideration; Judge Henderson would have simply denied enforcement.

On remand, although it still used some language redolent of its original waiver theory, 1 the Board essentially adopted Chief Judge Edwards' suggestion and fashioned an exception to the implementation after impasse doctrine. The Board explained that although the doctrine "is designed, in part, to allow an employer to exert unilateral economic force .... [it is legitimate] only as a method for breaking the impasse." McClatchy Newspapers, Publishers of The Sacramento Bee, 321 N.L.R.B. No. 174 at 4, 1996 WL 506086 (1996) (McClatchy II). In other words, the Board grounded its new "narrow exception" on the impact that implementation would have on the collective bargaining process:

Were we to allow the Respondent here to implement its merit wage increase proposal and thereafter expect the parties to resume negotiations for a new collective-bargaining agreement, it is apparent that during the subsequent negotiations the Guild would be unable to bargain knowledgeably and thus have any impact on the present determination of unit employee wage rates. The Guild also would be unable to explain to its represented employees how any intervening changes in wages were formulated, given the Respondent's retention of discretion over all aspects of these increases. Further, the Respondent's implementation of this proposal would not create any fixed, objective status quo as to the level of wage rates, because the Respondent's proposal for a standardless practice of granting raises would allow recurring, unpredictable alterations of wages [sic] rates and would allow the Respondent to initially set and repeatedly change the standards, criteria, and timing of these increases. The frequency, extent, and basis for these wage changes would be governed only by the Respondent's exercise of its discretion.

Id. at 6. Echoing Chief Judge Edwards' de-collectivization...

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