Standard Fittings Co. v. N.L.R.B.

• Decision Date: 31 May 1988
• Docket Number: No. 87-4608,87-4608
• Citation: 845 F.2d 1311
• Parties: 128 L.R.R.M. (BNA) 2613, 109 Lab.Cas. P 10,556 STANDARD FITTINGS COMPANY, Petitioner Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent Cross-Petitioner.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1311

845 F.2d 1311

128 L.R.R.M. (BNA) 2613, 109 Lab.Cas. P 10,556

STANDARD FITTINGS COMPANY, Petitioner Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent Cross-Petitioner.

No. 87-4608.

United States Court of Appeals, Fifth Circuit.

May 31, 1988.

Lawrence J. Molony, Metairie, La., for petitioner cross-respondent.

William A. Baudler, Eileen Armstrong, Dept. Assoc. Gen. Counsel, N.L.R.B., Collis Suzanne Stocking, Washington, D.C., for respondent cross-petitioner.

Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

Before REAVLEY, KING, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Standard Fittings Company, which was losing money dramatically, failed to implement a wage increase called for under its collective bargaining agreement. The Oil, Chemical & Atomic Workers International Union, representing the bargaining unit, filed an unfair labor practice for refusal to bargain. The National Labor Relations Board (NLRB) affirmed an administrative law judge's "make-whole" remedy against Standard Fittings, since its unilateral change in the collective bargaining agreement constituted a refusal to bargain. Standard Fittings petitions this court to review and set aside the NLRB's order; the NLRB cross-petitions for enforcement of its order. Standard Fittings argues that there is legal error in the administrative fact-findings (1) that the union's counterproposal on postponing the raise was legally conditioned on ratification by the union membership; (2) that non-union bargaining unit members could properly be excluded from the ratification process; (3) that the employer had not reached "impasse" in the negotiations; and (4) that the employer had an obligation to "continue to talk with the union." However, it is clear that Standard Fittings did not have a unilateral right to change a contract term that is a mandatory subject of bargaining, even if Standard Fittings bargained to an impasse with the union over the wage increase. Bargaining directly with the employees and ignoring the union was, therefore, an equally blatant violation of the employer's duty to bargain. Accordingly, we deny Standard Fittings' petition for review and grant the NLRB's cross-petition for enforcement.

I.

Standard Fittings' Problem and the Impermissible Solution It

Implemented.

Production and maintenance employees at Standard Fittings' Opelousas, Louisiana, facility are represented by the Oil, Chemical & Atomic Workers International Union. Standard Fittings and the union had agreed to a collective bargaining agreement that ran from March 1, 1984, through March 1, 1986. According to the terms of that agreement, Standard Fittings agreed to raise the wages of the employees whom the union represented by $.35/hour on March 1, 1985.

Standard Fittings felt itself financially unable to increase the employees' wages by the agreed amount on March 1, 1985. Standard Fittings manufactures and distributes forged steel and pipe fittings, but its business in the early 1980s was apparently quite poor. Its president, Erwin Davlin, met with the union's negotiating committee on February 20, 1985, in an effort to obtain union consent to delaying the $.35/hour wage increase for nine months. He told the committee that if it did not agree to his proposal, Standard Fittings would be forced to take drastic action: The company would either have to lay off a large number of workers, or reduce their hours from 40 per week to 30 or 32 hours per week. Davlin told the union officials that if he did not take one of these courses of action, Standard Fittings would be forced to file for bankruptcy.

Understanding the gravity of the situation and that Standard Fittings had a specific contractual right to schedule hours of work and to reduce the number of employees by layoff, the union was cooperative. After examining the company's books, the union negotiating committee again met with Davlin on March 6. They explained that the union would be willing to accept a six-month delay in the $.35/hour increase, but conditioned this counter-proposal on ratification "by the membership."

Davlin accepted the union's offer and its terms. He later testified that he thought that all unit members, including nonunion employees, would be voting. On March 14, at the union local's monthly meeting, 119 of the bargaining unit's 300 members voted on the counterproposal. These union members defeated that proposed modification by a margin of 97-22. This lopsided result represented a majority of those present and voting, but a minority of the total employees affected by the decision.

The next morning, the union informed Davlin that the membership had rejected the counterproposal offered by the leadership. Davlin insisted that the union negotiating committee call a special membership meeting to reconsider the postponement. The members of the negotiating committee informed Davlin that they could not call a special meeting without twenty signatures of members of the local. Davlin then told the committee that he was going to talk to the employees directly regarding his request to delay the $.35/hour wage increase.

On Monday, March 18, the officials of the local called the international headquarters of the union and obtained permission to call a special meeting. But when the local's officers informed Standard Fittings that they were calling another vote, Davlin told them that he was not going to wait for the special meeting, but would instead meet directly with the union employees that day.

Throughout the week beginning March 18, Davlin held meetings with Standard Fittings' employees. There were two series of such direct appeals to the labor force--meeting all the employees, union and non-union, but in groups of approximately twenty persons each. In the first series of meetings on March 18 and 19, Davlin described the company's financial situation and explained why the company wanted to delay the scheduled wage increase. During the second series of meetings, on March 21 and 22, Davlin told the employees that each employee individually was to choose to accept a delay in the promised raise, with no reduction in hours, or receive the scheduled wage increase knowing that the company would be forced to reduce that employee's hours from 40 to 30 hours per week.

Many of the employees agreed to postpone their $.35/hour raise. A few, however, did not accept the appeal to delay the increase; the company cut those employees' work week back to 30 hours, but implemented the contractual wage increase for such reduced hours. Standard Fittings did eventually increase all the employees' wages by $.35/hour, but not until October 1, 1985. The eventual raise was not retroactive for those workers whose hours had not been cut but who forewent the increase for seven months.

II.

The NLRB Proceeding.

The union thereafter filed an unfair labor practice complaint, in which it charged that Standard Fittings, in violation of section 8(a)(5) of the National Labor Relations Act (NLRA), had refused to bargain collectively with the union and had violated the employees' rights to engage in a protected, concerted labor activity under section 8(a)(1) of the NLRA. After a hearing on these unfair labor practice charges, the administrative law judge (ALJ) agreed with the union.

The ALJ imposed a "make whole" remedy on Standard Fittings. A "make-whole" remedy imposes upon the employer the obligation to pay each employee the difference between what the employee would have made had the employee received the scheduled wage increase on time and what the employee actually made. On appeal to the NLRB, a three-member panel affirmed the ALJ's findings of fact and conclusions of law.

The standard of review for questions of law determined by the NLRB is de novo, but if an NLRB construction of the statute is "reasonably defensible," its decisions are to be confirmed. See, e.g., Pattern Makers' League v. NLRB, 473 U.S. 95, 105 S.Ct. 3064, 87 L.Ed.2d 68 (1985); NLRB v. Local Union 103, Iron Workers, 434 U.S. 335, 350, 98 S.Ct. 651, 660, 54 L.Ed.2d 586 (1978); NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). The ALJ's findings of fact, which include his finding that Standard Fittings accepted the counterproposal and did not bargain to impasse with the union, must be reviewed under the substantial evidence standard of review. NLRA Sec. 10(e); NLRB v. Strong Roofing & Insulating Co., 393 U.S. 357, 361, 89 S.Ct. 541, 545, 21 L.Ed.2d 546 (1969) (section 10(e) allows only limited judicial review); Capital-Hustling Co. v. NLRB, 671 F.2d 237, 243 (7th Cir.1982). Under that standard of review, the ALJ's decision must be upheld if a reasonable person could have found what the ALJ found, even if the appellate court might have reached a different conclusion had the matter been presented to it in the first instance. Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 465, 95 L.Ed. 456 (1951); Georgia Kraft Co. v. NLRB, 696 F.2d 931, 936 (5th Cir.1983); Central Freight Lines, Inc. v. NLRB, 666 F.2d 238, 239 (5th Cir.1982).

III.

Mandatory Subjects of Bargaining and the Duty To Bargain.

This case is a textbook example of the most serious kinds of problems which an employer faces in meeting its duty to bargain. Section 8(a)(5) of the NLRA makes it an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of its employees." Section 9(a) of the NLRA says that a union properly chosen to represent a bargaining unit "shall be the exclusive representative of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment."

The Supreme Court, reading these provisions together, has interpreted them to mean that an employer must bargain with a union representing its employees before unilaterally changing any...