N.L.R.B. v. Wehr Constructors, Inc.
| Decision Date | 26 October 1998 |
| Docket Number | No. 96-5358,96-5358 |
| Citation | 159 F.3d 946 |
| Parties | 159 L.R.R.M. (BNA) 2581, 136 Lab.Cas. P 10,277 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. WEHR CONSTRUCTORS, INC., Respondent. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Aileen A. Armstrong, Dep. Asso. Gen. Counsel, Charles P. Donnelly, Jr., William M. Bernstein (argued and briefed), National Labor Relations Board, Appellate Court Branch, Washington, DC, for Petitioner.
Andrew J. Russell (argued and briefed), Smith & Smith, Louisville, KY, for Respondent.
Before: SILER, BATCHELDER, and GIBSON, * Circuit Judges.
The National Labor Relations Board seeks enforcement of its Order against Wehr Constructors, Inc., finding that Wehr violated sections 8(a)(1), (3), and (5) of the National Labor Relations Act (the Act), 29 U.S.C. § 158(a)(1), (3), and (5) (1994). Wehr contests two findings of the Board, both of which center on Wehr's statutory duty to bargain with the Kentucky State District Council of Carpenters (the Union) on the subject of subcontracting. Wehr argues that: (1) it had no duty to bargain over each individual subcontracting decision made after the Union's certification; and (2) upon the Union's certification, Wehr did not violate the Act by unilaterally changing its subcontracting policies without bargaining with the Union. For the reasons stated below, we deny enforcement of those portions of the Board's order relating to Wehr's subcontracting activities as well as the accompanying make-whole remedy imposed by the Board. 1
Wehr, a general contractor, and the Union have been parties to various collective bargaining agreements, the last being a section 8(f) agreement running from June 1, 1986 through May 31, 1989.
Before the May 31, 1989 expiration of the agreement, the parties negotiated in an attempt to secure a renewal agreement. During these negotiations, subcontracting was the major issue. Wehr insisted that it be given the right to subcontract, without restriction, to non-union subcontractors in the area of "Interior Systems"--which includes drywall, metal studs, acoustical ceilings, and flooring. The Union rejected Wehr's position, but expressed a willingness to negotiate to find a solution. Union Organizing Director Lawrence Hujo and Wehr Attorney James Smith met on several occasions before May 31, 1989, but failed to reach an agreement.
On May 25, 1989, Wehr advised the Union that it would no longer recognize the Union following the May 31, 1989 expiration of the contract. As a result, on May 30, 1989, the Union filed a petition for certification with the Board, and on August 4, 1989, after a Board-conducted election, the Union was certified as the exclusive bargaining representative for Wehr's carpenter employees.
After the collective bargaining agreement expired, the parties continued to unsuccessfully negotiate for a new collective bargaining agreement through April 1990, and discontinued talks until December 1990. Meanwhile, the Union received information that Wehr had subcontracted bargaining unit work at a number of its projects without first bargaining with the Union. In December 1990, the Union began a lengthy process of attempting to obtain information about Wehr's subcontracting activities, and finally received most of its requested information in May 1991. In total, the parties negotiated approximately sixteen times without reaching an agreement.
The Union filed numerous charges against Wehr alleging various unfair labor practices. Based on these charges, the General Counsel issued a complaint on June 5, 1991, alleging that, since the date of Union certification (August 4, 1989), Wehr violated the Act by subcontracting bargaining unit work at various construction projects without affording the Union an opportunity to bargain.
An administrative law judge (ALJ) held a hearing and concluded that "[b]y subcontracting unit work on various projects subsequent to the Union's certification as the employees' collective bargaining agent, [Wehr] violated Section 8(a)(1) and (5) of the Act." The ALJ issued a recommended Order ordering Wehr to cease and desist from "subcontracting bargaining unit work at its construction projects without bargaining in good faith with the Union" and to "rescind its unilateral implementation of policies relating to the subcontracting of unit work."
Wehr appealed the decision to the Board. On December 16, 1994, the Board issued a Decision and Order adopting the ALJ's conclusion that Wehr violated the Act and ordering Wehr to "[c]ease and desist from ... [s]ubcontracting bargaining unit work at its construction projects without bargaining in good faith with the Union" and to "[r]escind its unilateral implementation of policies relating to ... the subcontracting of unit work." Additionally, the Board ordered Wehr to make whole "all unit employees for any loss of earnings or other benefits suffered as a result of [Wehr's] unlawful ... subcontracting practices."
On appeal, Wehr argues that it did not change its subcontracting procedures upon or after the Union's certification, and thus the Board erred in ordering it to rescind its unilateral implementation of policies relating to the subcontracting of unit work. Wehr also disputes that upon certification it had a duty to bargain with the Union over each individual subcontracting decision. In addition, Wehr argues that the Board erred in directing that Wehr make whole any employees who suffered losses as a consequence of Wehr's alleged unlawful subcontracting.
The NLRB's findings of fact are "conclusive" if supported by "substantial evidence on the record considered as a whole." 29 U.S.C. § 160(e) (1994). Substantial evidence "means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quotations omitted). We keep in mind that a reviewing court "may [not] displace the Board's choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." Id. at 488, 71 S.Ct. 456. Although we normally review questions of law de novo, the NLRB's interpretation of the act is entitled to deference if it is reasonably defensible. See Holly Farms Corp. v. NLRB, 517 U.S. 392, 409, 116 S.Ct. 1396, 134 L.Ed.2d 593 (1996); Ford Motor Co. v. NLRB, 441 U.S. 488, 497, 99 S.Ct. 1842, 60 L.Ed.2d 420 (1979).
Wehr contends that the Board's finding that Wehr violated the Act by unilaterally changing its subcontracting practices is not supported by substantial evidence and is erroneous as a matter of law.
Under NLRB v. Katz, 369 U.S. 736, 743, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962), an employer violates section 8(a)(5) of the Act if it changes existing terms and conditions of employment without first bargaining with the Union.
The parties do not dispute that the 1986-1989 contract, which restricted Wehr's ability to subcontract to non-union subcontractors, 2 created a section 8(f) bargaining relationship as opposed to a section 9(a) relationship. 3 Near the end of the 1986-1989 contract, Wehr notified the Union that it would no longer recognize the Union following the May 31, 1989 expiration of the contract. When the section 8(f) agreement expired, the Union no longer enjoyed the presumption of majority status and Wehr was relieved of any obligation to bargain with the Union over conditions of employment. See John Deklewa & Sons, Inc., 282 N.L.R.B. 1375, 1377-78, 1388, 1987 WL 90249 (1987), enforced, 843 F.2d 770 (3d Cir.1988). From June 1, 1989, until August 4, 1989, the date the Union was certified by the Board, Wehr was free to subcontract with non-union subcontractors without first bargaining with the Union. See id.; Gottfried v. Sheet Metal Workers' Int'l. Assn. Local No. 80, 876 F.2d 1245, 1249 (6th Cir.1989).
During this interim period Wehr routinely subcontracted to non-union subcontractors. Upon Union certification, Wehr continued to subcontract to non-union subcontractors. There is no evidence to support the Board's conclusion that Wehr unilaterally changed its subcontracting practices upon or after Union certification.
Wehr also argues that the Board erred in concluding that Wehr violated the Act by subcontracting bargaining unit work at its construction projects after the Union's certification without first bargaining with the Union.
An employer violates section 8(a)(5) of the Act if it takes unilateral action regarding a mandatory subject of bargaining without first bargaining to impasse with the certified representative of its employees. See "Automatic" Sprinkler Corp. v. NLRB, 120 F.3d 612, 616 (6th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 1675, 140 L.Ed.2d 813 (1998). Section 8(a)(5) requires an employer to bargain with its employees' representative about "wages, hours, and other terms and conditions of employment." 29 U.S.C § 158(a)(5) and (d). Congress deliberately used the vague phrase "conditions of employment" to allow the Board substantial latitude in defining the scope of mandatory bargaining, and the Board's determination in this regard is entitled to considerable deference and will be upheld if it is a "reasonably defensible" interpretation of the Act. See NLRB v. Plymouth Stamping Div., 870 F.2d 1112, 1115 (6th Cir.1989); Ford Motor Co., 441 U.S. at 495-97, 99 S.Ct. 1842. However, the Board's judgment is subject to judicial review and will not be enforced where the Board failed to apply the correct legal standard. See Ford Motor Co., 441 U.S. at 497, 99 S.Ct. 1842.
The Board found that Wehr's subcontracting "did not alter its basic operation," that Wehr "clearly made its decision [to subcontract] on economic grounds," and that Wehr "replaced its own employees with those of an independent contractor to do the same work." Therefore, relying on...
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