Pan American Grain Co., Inc. v. N.L.R.B.

• Decision Date: 24 February 2009
• Docket Number: No. 08-1351.,08-1351.
• Citation: 558 F.3d 22
• Parties: PAN AMERICAN GRAIN CO., INC. and Pan American Grain Manufacturing Company, Inc., Petitioners, Cross-Respondents, v. NATIONAL LABOR RELATIONS BOARD, Respondent, Cross-Petitioner.
• Court: U.S. Court of Appeals — First Circuit

558 F.3d 22

PAN AMERICAN GRAIN CO., INC. and Pan American Grain Manufacturing Company, Inc., Petitioners, Cross-Respondents, v.NATIONAL LABOR RELATIONS BOARD, Respondent, Cross-Petitioner.

No. 08-1351.

United States Court of Appeals, First Circuit.

Heard December 3, 2008.

Decided February 24, 2009.

Rafael J. Lopez with whom Ruperto J. Robles was on brief for petitioner.

Greg P. Lauro with whom Meredith L. Jason, Ronald Meisburg, General Counsel, John E. Higgins, Jr., Deputy General Counsel, John H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy Associate General Counsel, and National Labor Relations Board were on brief for Respondent, Cross-Petitioner.

Before BOUDIN, STAHL, and LIPEZ, Circuit Judges.

STAHL, Circuit Judge.

Pan American Grain Company, Inc. and Pan American Grain Manufacturing Company(collectively, "Pan American" or "the company")¹petition this court to set aside an order of the National Labor Relations Board("the Board").The Board submits a cross-application to enforce its order.We previously vacated and remanded the Board's order finding that Pan American, a Puerto Rican company, committed violations under the National Labor Relations Act("the Act"), 29 U.S.C. §§ 151 et seq., when it did not provide its employees with adequate notice and a reasonable opportunity to bargain before imposing layoffs.N.L.R.B. v. Pan Am. Grain Co., 432 F.3d 69(1st Cir.2005).Now, satisfied with the Board's supplemental decision and order issued in response to our remand, we deny Pan American's petition for review and grant the Board's cross-application for enforcement.

I.

The background facts of this case are discussed at greater length in our first examination of the Board's order, seeid., and here, we relate them summarily.On January 8, 2002, employees at two Pan American facilities began a strike after negotiations failed at reaching a new collective bargaining agreement between Pan American and the exclusive bargaining representative for its employees, the Congreso de Uniones Industriales de Puerto Rico("the Union").That same month, company president Jose Gonzalez spoke with two nonstriking truck drivers; during the conversation, Gonzalez stated that he"would rather close the company" than reach an agreement with the striking employees, called the strikers "jerks" and "sons of bitches," and indicated he would not be concerned if it cost $2 million to rid the company of them.On February 27, 2002, Pan American notified the Union that it had decided to lay off fifteen striking employees.A letter from Pan American to the Union, dated the same day, stated that the layoffs were "due to economic reasons and as a result of a substantial decrease in production and sales."Gonzalez later confirmed that sales dropped in January and February 2002 and conceded that the reduced level of sales caused the company to require "a lower work force."

Previously, in 1996, Pan American had begun to modernize its facilities' equipment to satisfy an environmental order which required significant changes in how the company conducted its business operations.The modernization resulted in decreased staffing needs and a reduction of one or two employees in each succeeding year.After the February 27 layoffs, Pan American initially did not cite its modernization program as a reason for the layoffs.But after the Union filed unfair labor charges with the Board, Pan American contended before a Board administrative law judge ("ALJ") that the layoffs were attributable to the modernization program.

After a thirty-two-day trial, the ALJ found that Pan American had violated the Act"by implementing the February 27 layoff without giving the Union adequate notice and reasonable opportunity to bargain."²Although the ALJ found the evidence of modernization and automation compelling enough to rebut a discrimination claim under 29 U.S.C. § 158(a)(3), the judge determined the striking employees were engaged in protected activity, found that antiunion animus existed, and noted that the timing of the layoffs in relation to the commencement of the strike was "somewhat suspicious" in reaching his conclusion that Pan American's February 27 layoffs violated the Act under 29 U.S.C. § 158(a)(5).³As a remedy for the violation, the ALJ ordered full backpay to and reinstatement of the fifteen employees.The Board affirmed the ALJ's ruling and adopted the recommended order.

On its first appeal to this court, Pan American asserted that because of the role of its modernization program in the layoffs, it was not required to bargain over the decision to terminate the fifteen employees, only over the effects of the layoffs, see generallyFirst Nat'l Maint. Corp. v. N.L.R.B., 452 U.S. 666, 101 S.Ct. 2573, 69 L.Ed.2d 318(1981), and that the appropriate remedy therefore was limited backpay as prescribed in Transmarine Navigation Corp.,170 N.L.R.B. 389(1968).A majority of the panel⁴ held that the Board had not sufficiently explained why Pan American had to bargain over a decision motivated both by reduced sales and a modernization program.Pan Am. Grain Co.,432 F.3d at 74.We thus remanded the case to the Board for clarification of how multiple motives for a layoff should be analyzed and whether the Board viewed modernization decisions as mandatory subjects of bargaining.

In its supplemental decision and order, the Board found that "a combination of factors, including a substantial reduction in sales in January and February 2002 ... coinciding with the ... strike" led to the February 27 layoffs such that the layoffs were motivated by reasons other than efficiency gains from modernization.The Board held that "because [Pan American] failed to establish it would have implemented any particular layoff solely as a result of modernization and even in the absence of its economic reasons, [it] had a duty to bargain over the February 27 layoff decision."The Board noted that it would have addressed this court's question of whether a company must bargain over layoffs arising solely because of modernization had Pan American established that any particular layoff was based exclusively on the modernization program.Based on this reasoning, the Board again found that Pan American had a duty to bargain with the Union over the decision to lay off fifteen employees, which "unquestionably affected the terms of unit employees' employment in a material and substantial way," and held that the company's unilateral implementation of the layoffs violated Sections 8(a)(5) and (1) of the Act.The Board again ordered a full backpay remedy.

II.

We now consider whether the Board complied with our remand and sufficiently clarified its reasoning such that its finding that Pan American violated Sections 8(a)(5) and (1) of the Act and the subsequent remedial order are justified.The Board has the primary responsibility for determining the scope of an employer's statutory duty to bargain, Ford Motor Co. v. N.L.R.B., 441 U.S. 488, 496, 99 S.Ct. 1842, 60 L.Ed.2d 420(1979), and we will affirm the Board's statutory construction so long as it is "reasonably defensible,"id. at 497, 99 S.Ct. 1842.SeeUniversal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456(1951)("[A]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.").We treat the factual findings of the Board as conclusive if supported by substantial evidence on the record.Id. at 477-78, 71 S.Ct. 456;29 U.S.C. §§ 160(e), (f).And because "the Act has granted the Board wide discretion in fashioning remedies,"N.L.R.B. v. Mount Desert Island Hosp., 695 F.2d 634, 642(1st Cir.1982), we will not disturb a remedial order "unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act."N.L.R.B. v. Otis Hosp., 545 F.2d 252, 257(1st Cir.1976)(quotingVa. Elec. & Power Co. v. N.L.R.B., 319 U.S. 533, 540, 63 S.Ct. 1214, 87 L.Ed. 1568(1943)).

Under the Act, an employer must bargain collectively with the representative of its employees over decisions affecting "wages, hours, and other terms and conditions of employment."29 U.S.C. § 158(d);N.L.R.B. v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349, 78 S.Ct. 718, 2 L.Ed.2d 823(1958).An employer violates this duty when he changes a mandatory term or condition of employment without giving the employees' representative adequate notice and an opportunity to bargain.N.L.R.B. v. Katz, 369 U.S. 736, 745-46, 82 S.Ct. 1107, 8 L.Ed.2d 230(1962);see29 U.S.C. § 158(d).

Evaluating the scope of mandatory subjects of bargaining, the Supreme Court identified three categories of management decisions in First National Maintenance Corp., 452 U.S. 666, 101 S.Ct. 2573, 69 L.Ed.2d 318.Decisions that affect the employment relationship only tangentially, such as advertising and product design, are not mandatory subjects of bargaining.Id. at 676-77, 101 S.Ct. 2573.Decisions directly affecting the relationship—wages, working conditions, and the like—are mandatory subjects of bargaining.Id. at 677, 101 S.Ct. 2573.This requirement ensures that when an employer aims to reduce labor costs, employees are presented with the opportunity to negotiate concessions that reduce overall costs and thus spare jobs.Fibreboard Paper Prod. Corp. v. N.L.R.B., 379 U.S. 203, 213-14, 85 S.Ct. 398, 13 L.Ed.2d 233(1964).Finally, some management decisions have a direct impact on employment but focus on economic profitability rather than the employment relationship.First Nat'l Maint. Corp., 452 U.S. at 677, 101 S.Ct. 2573.An employer need not bargain over a decision "involving a change in the scope and direction of the enterprise" and not "`primarily about conditions of employment, though the effect of the decision may be necessarily to...