Teleprompter Corp. v. N.L.R.B.

• Decision Date: 28 December 1977
• Docket Number: No. 77-1054,77-1054
• Citation: 570 F.2d 4
• Parties: 97 L.R.R.M. (BNA) 2455, 83 Lab.Cas. P 10,296 TELEPROMPTER CORPORATION et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — First Circuit

Page 4

570 F.2d 4

97 L.R.R.M. (BNA) 2455, 83 Lab.Cas. P 10,296

TELEPROMPTER CORPORATION et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 77-1054.

United States Court of Appeals, First Circuit.

Argued May 3, 1977.

Decided Dec. 28, 1977.

Raymond G. McGuire, Portland, Me., with whom Walter E. Corey, III, and Curtis, Thaxter, Corey, Lipez & Stevens, Portland, Me., were on brief, for petitioners.

W. Christian Schumann, Atty., Washington, D. C., with whom Allison W. Brown, Jr., Deputy Asst. Gen. Counsel, John S. Irving, Gen. Counsel, John E. Higgins, Jr., Deputy Gen. Counsel, Carl L. Taylor, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Madge F. Jefferson, Atty., Washington, D. C., were on brief, for respondent.

Before COFFIN, Chief Judge, CAMPBELL, Circuit Judge, DOOLING, District Judge. ^*

LEVIN H. CAMPBELL, Circuit Judge.

At issue is the extent of an employer's duty to furnish profitability data to a union.

An employer is ordinarily empowered to keep from its employees data concerning the profitability of its business, but it may lose that right if it chooses to counter union demands by claiming economic incapacity. NLRB v. Truitt Mfg. Co., 351 U.S. 149, 76 S.Ct. 753, 100 L.Ed. 1027 (1956). In the present case, a parent corporation, Teleprompter, which operates cable TV systems and other enterprises in many states through numerous subsidiaries, announced a wage freeze policy, effective as to employees of subsidiaries, on the ground that its own profits, i. e. those of the parent, were failing. In support of its position, it offered to furnish, and furnished, economic data documenting its own economic condition, but declined to reveal the economic condition of any particular subsidiary. The present case involves three separate unfair labor practice complaints, each brought against the parent, Teleprompter, and one of its cable TV subsidiaries, for failure to comply with a local union's request for data showing the financial condition of the particular subsidiary with which the local was then negotiating. The complaints were consolidated for hearing in Milwaukee, Wisconsin, before an Administrative Law Judge, Teleprompter and each subsidiary being accused of having violated sections 8(a) (1) and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and (5), in that they did not furnish information "necessary and relevant" for the local bargaining representatives to perform their statutory bargaining duties.

After a hearing, the Administrative Law Judge issued a Decision and Order recommending that all charges against the employer be dismissed. The judge found that the employer had no obligation under section 8(a)(5) except to substantiate the accuracy and good faith of its claim of inability to pay and that it had done this. The ALJ also found that since the wage freeze had as its purpose coping with the companywide loss of profits, the profitability of a given subsidiary was not relevant for local bargaining purposes.

The NLRB did not adopt the judge's recommended order but found instead that Teleprompter had violated its duty to bargain in good faith by refusing to authorize its subsidiaries to release local profitability data to the local unions in order to enable them "to intelligently evaluate" the employer's assertions that an across-the-board wage freeze was necessary. Petitions for review and for enforcement followed in this court.

I

Teleprompter is a New York corporation with headquarters in New York City. Through its cable division it operates approximately 139 cable systems in 33 states, some of which are controlled by its wholly or partially owned corporate subsidiaries, and some of which may be operated directly by the parent. Teleprompter also owns other corporations, Filmation and Muzak, which are engaged in different businesses and which constitute other divisions of the parent company. The employees of a number of the cable subsidiaries are represented by labor organizations, approximately 35 of them by locals of the International Brotherhood of Electrical Workers (IBEW).

In the events leading up to the unfair labor practice charges in issue, Teleprompter dealt with IBEW first at the national then at the local level. On January 13, 1975, Mr. Russell Karp, President of Teleprompter, sent a letter to all employees, including those of its subsidiaries, announcing an immediate moratorium on wage increases for both management and non-management personnel. There was an exception only for increases required by pre-existing contracts. The reason for the moratorium was explained as follows:

"Teleprompter will not make a profit in 1974. This is due, in part, to extremely high interest rates and, in part, to a general economic downturn."

The ALJ found that the company wanted "a more favorable cash flow position, and this required getting a $20,000,000 bank loan, which could be accomplished only by demonstrating that there would be no wage increases until its financial situation improved."

On January 14, 1975, Mr. Paul Gillert, Teleprompter's director of industrial relations, requested by telephone a meeting with Mr. Arthur Korff, director of the cable television department of the IBEW, for the purpose of discussing the wage freeze. During the meeting, held on January 27, 1975, there was no discussion of the profitability or unprofitability of any of the local systems and it is undisputed that Teleprompter at no time pointed to any particular subsidiary's performance as justifying its decision. Korff expressed distress that Teleprompter was taking a firm position on the wage freeze instead of leaving it open for negotiation with each local. He thereafter requested certain information and documents comprehensively listed by IBEW's economist so that the International could substantiate independently the company's claim that it could not pay wage increases.

Teleprompter thereafter supplied the IBEW with a considerable body of financial data about the parent company's condition, much of it of a confidential nature, including: a list of cable systems operated by Teleprompter as of March 31, 1972; a "Weekly Connection and Additional Outlets Report" for the week ending February 2, 1975; the 10-K Report for 1973 submitted to the SEC; the first quarter report for 1974; various bank agreements negotiated by Teleprompter with a consortium of creditor banks; a "Consolidated Projection of Sources and Uses of Cash"; a three-year projection of Expenses and Revenues for local origination enterprise; data on the average monthly subscribed rate (system-wide). No claim is made that this information was not adequate to apprise the union of the parent's financial status.

Not satisfied, however, the IBEW asserted that it required data relating specifically to each subsidiary. This was needed, the International said, so that the union's economist could understand the structure of Teleprompter and could "trace labor costs and find out if these costs relative to other cost items on a system basis and on a national basis had somehow gotten out of proportion." If the company's financial problems were not related to the wages paid members of a given IBEW local, the union felt that it should not advise the local to forego a wage increase.

Because the International represented no Teleprompter employees, these exchanges did no more than set the stage for the unfair labor practice complaints here in issue. In early 1975, however, contract negotiations were opened with three IBEW locals representing employees at subsidiary corporations in LaCrosse, Wisconsin, Great Falls, Montana, and Worcester, Massachusetts. Management at each of the subsidiaries put forward Teleprompter's wage freeze policy as requiring refusal of any requested pay raise. In each instance, Mr. Gillert, Teleprompter's director of industrial relations, along with the particular local system manager, negotiated on behalf of management. Mr. Gillert testified that in reviewing wage requests at the local systems level, he customarily considered the manager's recommendations, area wage scales, collective bargaining contracts with other cable TV companies in the area, and wage rates in industries employing technicians with skills similar to those of Teleprompter's employees. In five years of negotiating for the company, Mr. Gillert said he had never considered whether a subsidiary was or was not profitable when making a decision about a wage offer to the employees of that system.

Faced with the parent's company-wide freeze, the bargaining representatives of each of the locals requested detailed information about the profitability of its system including all data that had been requested in Mr. Korff's January 30 letter. Each explained that the information was essential so that the union representative could intelligently evaluate the company policy of a wage freeze. By way of response, Teleprompter provided each local with the same package of information it had given to the International but contended that profitability information about the individual subsidiaries was irrelevant since the profitability or lack thereof of a particular facility had nothing to do with the moratorium. ¹ The profitability of the Teleprompter enterprise as a whole was said to be the sole material factor.

The wage freeze was lifted on October 28, 1975 and contracts covering January 1, 1976 through December 31, 1978 were ultimately executed by Teleprompter and each of the three IBEW locals.

It is significant that while broader charges were initially made by the IBEW and its locals, the complaints were eventually tried solely on the narrow issue of whether respondents violated sections 8(a)(1) and (5) by failing to provide profitability data concerning the three systems in issue. There was no issue of a duty to furnish profitability data on all other subsidiaries comprising the Teleprompter chain for the benefit of the...