Nielsen Lithographing Co. v. N.L.R.B.

• Decision Date: 11 October 1988
• Docket Number: AFL-CI,Nos. 87-2905,I,87-3118,O-K-,s. 87-2905
• Citation: 854 F.2d 1063
• Parties: 129 L.R.R.M. (BNA) 2367, 129 L.R.R.M. (BNA) 2732, 106 A.L.R.Fed. 685, 109 Lab.Cas. P 10,674 The NIELSEN LITHOGRAPHING COMPANY, Petitioner, Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Cross-Petitioner. Graphic Communications International Union, Local 508ntervening Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1063

854 F.2d 1063

129 L.R.R.M. (BNA) 2367, 129 L.R.R.M. (BNA) 2732,

106 A.L.R.Fed. 685, 109 Lab.Cas. P 10,674

The NIELSEN LITHOGRAPHING COMPANY, Petitioner, Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Cross-Petitioner Graphic Communications International Union, Local 508 O-K-I AFL-CIO, Intervening Respondent.

Nos. 87-2905, 87-3118.

United States Court of Appeals Seventh Circuit.

Argued June 2, 1988.

Decided Aug. 23, 1988.

As Amended Oct. 11, 1988.

Lawrence T. Zimmerman, Washington, D.C., for petitioner.

Thomas F. Phalen, Jr., Kircher & Phalen, Cincinnati, Ohio, Charles P. Donnelly, Jr., NLRB, Washington, D.C., for respondents.

Before POSNER, COFFEY and KANNE, Circuit Judges.

POSNER, Circuit Judge.

In labor negotiations, as in any negotiations, the party with more information has an edge. So when Nielsen Lithographing Company claimed during wage negotiations with its workers' union that it had to reduce wages and benefits in order to remain competitive with other printers, the union asked the company to let its accountants examine the books and other records--financial statements, tax returns, records of compensation paid managerial and supervisory personnel--that would substantiate (or refute) the company's claim of need. At argument, the union's counsel said the union wanted to see all of the company's books and records, including purchasing records; although the scope of the request is not directly in issue, we remind the Board of its own asseveration that requests must be reasonable, balancing pertinence of the information sought with burden on the employer in producing it. See, e.g., Washington Materials, Inc., 276 N.L.R.B. 839, 854 (1985), enforced in part and denied enforcement in part, 803 F.2d 1333 (4th Cir.1986); see also Teleprompter Corp. v. NLRB, 570 F.2d 4, 11 (1st Cir.1977).

The company refused the demand for access to its books, and the union struck, and later filed charges with the Labor Board, which held that Nielsen's refusal to open its books to the union was an unfair labor practice and ordered Nielsen to cease the practice and rehire the workers who had struck and whom Nielsen had fired. 274 N.L.R.B. No. 118 (1986). Nielsen asks us to set aside the order, and the Board and the union ask us to enforce it. Although Nielsen's plant is in Ohio, and all the events relevant to this case, including the negotiations and the strike, occurred there, it transacts business in this circuit and is therefore entitled to seek judicial review of the Board's order here. See 29 U.S.C. Secs. 160(e), (f); S.L. Industries, Inc. v. NLRB, 673 F.2d 1, 3 (1st Cir.1982).

In NLRB v. Truitt Mfg. Co., 351 U.S. 149, 76 S.Ct. 753, 100 L.Ed. 1027 (1956), the Supreme Court held that it is an unfair labor practice for an employer who claims to be financially incapable of paying a wage increase requested by a union to refuse to let the union see the employer's books for purposes of verifying its claim. Otherwise labor negotiations would involve an even greater element of bluff, guesswork, and sheer gambling than they inevitably do, because the union would be put to the Hobson's choice of acceding to a quite possibly exaggerated claim of poverty or risking its members' jobs. The Court didn't think that forcing the union to play Russian roulette was the epitome of good faith bargaining.

Nielsen, however, never claimed that it was unable to pay the existing scale of wages and benefits. It admitted to being profitable but said it wanted to bring its wage bill into line with the wages paid by competitors to whom it was losing sales. A company can survive, certainly in the short run and often in the long run, even though it is paying higher wages than its competitors. The company may have some other cost advantage; its competitors may price above their costs; the market may be expanding rapidly. The company will grow less rapidly than if its costs were lower and may stagnate or decline, but it need not die. There is thus no contradiction in a company's stating on the one hand that it is profitable and on the other hand that its costs are higher than its competitors' and it wants to reduce them. The Board concedes that if this is all Nielsen said, Nielsen had no duty to open its books to the union. See Washington Materials, Inc. v. NLRB, 803 F.2d 1333, 1338-39 (4th Cir.1986) (but see NLRB v. Western Wirebound Box Co., 356 F.2d 88, 91 (9th Cir.1966), which held that an employer's claim of competitive disadvantage required the employer, on the union's demand, to present substantiating data). A need is objective; it can be substantiated. But how do you substantiate a want? If a company says it wants to make higher profits by reducing its labor costs, what data would falsify its statement?

The Board found, however, that Nielsen had done more than express a desire for lower costs and higher profits; that it had said the wage cuts were necessary if the company was to remain competitive and reverse a trend of losing business to lower-cost competitors. The company's president had told the workers that "to survive we must be able to compete. Our business ... and jobs are at stake if we can not.... If we don't [compete] the recent trend of losing even greater amounts of work to other companies will continue and the jobs of our employees will be lost." The Board held that this statement, and others like it, were sufficient under Truitt to create a duty of substantiation. Cf. Armored Transport of Calif., Inc., 288 N.L.R.B. No. 70 (1988).

This is not an irrational extension of Truitt. A rational businessman is concerned with the long run as well as the short run. He wants to maximize the present value of his company's earnings; and if the company has a dismal future, its expected future earnings, and hence its present value, will be depressed as a result. An employer that in negotiations with its union claims that its wages are out of line with those of its competitors and as a result its future is bleak--however rosy the present may seem--makes a serious and factual claim, one that if true must cause the union to give serious consideration to making the concessions the employer is demanding, or at least making some concessions. Informed bargaining over the issue requires that the union have access to the data from which the company has projected its bleak future.

So at least the Board could reason within the analytical framework established in Truitt--so it did reason in this case. The problem is that right after it ruled in favor of the union we decided NLRB v. Harvstone Mfg. Corp., 785 F.2d 570 (7th Cir.1986), a case similar to the present one, against the Board. Following earlier circuit precedent (United Fire Proof Warehouse Co. v. NLRB, 356 F.2d 494, 498 (7th Cir.1966)), we held that predictions that a business will falter--even that it will close--are "nothing more than truisms," id. at 577, and do not trigger the duty of disclosure under Truitt, a duty that we deemed limited to inability to pay during "the term [ordinarily three years] of the new collective bargaining agreement" being negotiated, id.

The Labor Board in its decision in this case had actually relied on the very decision (Harvstone Mfg. Corp., 272 N.L.R.B. 939 (1984)) that we reversed. Nielsen therefore asked for reconsideration but the Board refused, saying: "Respondent filed with the Board a motion for reconsideration contending ... that the Board's order ... directly conflicts with a certain decision of the United States [Court of] Appeals for the Seventh Circuit. The Board is of the opinion that the Respondent does not assert any matter not previously considered and that the Respondent's contentions are without merit." Period.

The decision alluded to so coyly was, of course, our Harvstone decision. How the Board could say that the motion for reconsideration did "not assert any matter not previously considered" by the Board perplexes us, since we did not think the Board gifted with prevision and therefore able to read and evaluate our decisions before they are rendered. In any event there is no reasoned discussion of our decision.

Yet if either in the present case or in Harvstone the Board had anticipated the substance of the analysis in our opinion in Harvstone, then perhaps its statement in the present case that the petition for reconsideration "did not assert any matter not previously considered" by the Board could be interpreted to mean that our opinion contained no argument that the Board had not...