United Elec., Radio and Mach. Workers v. N.L.R.B.

• Decision Date: 02 September 2009
• Docket Number: No. 08-2724.,08-2724.
• Citation: 580 F.3d 560
• Parties: UNITED ELECTRICAL, RADIO AND MACHINE WORKERS OF AMERICA (UE), Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, and Aluminum Casting & Engineering Company, Incorporated, Intervening Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

580 F.3d 560

UNITED ELECTRICAL, RADIO AND MACHINE WORKERS OF AMERICA (UE), Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent, and Aluminum Casting & Engineering Company, Incorporated, Intervening Respondent.

No. 08-2724.

United States Court of Appeals, Seventh Circuit.

Argued January 15, 2009.

Decided September 2, 2009.

Rehearing and Rehearing En Banc Denied October 1, 2009.

Polly J. Halfkenny (argued), Joseph Cohen, United Electrical, Radio and Machine Workers of America, Pittsburgh, PA, for Petitioner.

Irving E. Gottschalk, National Labor Relations Board, Milwaukee, WI, Linda J. Dreeben, Joan E. Hoyte (argued), National Labor Relations Board Office of the General Counsel, Washington, DC, for Respondent.

Kevin J. Kinney (argued), Krukowski & Costello, Milwaukee, WI, for Intervening Respondent.

Before RIPPLE, MANION and EVANS, Circuit Judges.

RIPPLE, Circuit Judge.

This case has been here once before. In our earlier decision, we enforced an order of the National Labor Relations Board ("the Board"), which had found that Aluminum Casting & Engineering Company, Inc. ("ACE/CO" or "the Company") violated the National Labor Relations Act ("NLRA") when, in 1995, it deviated from its established practice of awarding annual, across-the-board wage increases to all employees because of their attempts to unionize. See NLRB v. Aluminum Casting & Eng'g Co., Inc., 230 F.3d 286, 293 (7th Cir.2000) (UEW I). In UEW I, we enforced the Board's order requiring ACE/CO to "[m]ake whole all employees who were not granted annual wage increases in 1995 to date." Id. at 295 (emphasis omitted). We noted, however, that ACE/CO should be given the opportunity to prove that it would not have awarded an across-the-board wage increase in 1996 and the following years. Id. at 296-97.

After a substantial-compliance investigation, the Administrative Law Judge ("ALJ") determined that a twenty-five-cent-per-hour wage increase had been withheld unlawfully from the employees in 1995. The ALJ further determined that ACE/CO's liability for this across-the-board wage increase was limited to 1995, and, consequently, ACE/CO was not required to build this additional twenty-five cents per hour into its employees' wages for 1996 and the following years. A majority of a three-member panel of the Board agreed.¹ It reasoned that carrying forward the 1995 wage increase into 1996 and the following years would result in a windfall for the employees and would be inconsistent with the remedial purposes of the National Labor Relations Act, 49 Stat. 449, as amended, 29 U.S.C. § 151 et seq. Second Supplemental Decision and Order, 349 NLRB No. 18, slip op. at 2. ACE/CO therefore was ordered only to award back pay to 381 employees for the hours they worked in 1995.² The Board did not, however, require ACE/CO to build this wage increase into each employee's base wage.

In this petition for review, United Electrical, Radio & Machine Workers of America ("UEW") maintains that the Board's 1995 back pay award should have been incorporated into the employees' "base wage" for that year, so that all subsequent pay raises would be added to a base wage that included this 1995 pay increase. In short, they submit that, beginning in 1996, the employees' "base wage" should have been equal to the wage rate they actually received in 1995 plus an additional twenty-five cents per hour; any additional wage increases they received in 1996 and beyond should have been added to that adjusted "base wage." For the reasons set forth in this opinion, we believe that the UEW is correct. Accordingly, we grant the petition for review, set aside the decision of the Board and remand this case for further proceedings consistent with this opinion.

I BACKGROUND

A detailed discussion of the factual background of this case may be found in our prior opinion, UEW I, 230 F.3d at 288-93. For the convenience of the reader, we shall repeat here the key details of ACE/CO's compensation practices that are necessary for an understanding of this phase of the litigation.

In 1989, ACE/CO announced that its hourly employees would receive a ten-cent-per-hour wage increase, effective February 13, 1989, and would later receive an additional five-cent-per-hour wage increase, effective August 14, 1989. These wage increases, which were based on rises in the cost of living in the Milwaukee area, the Company's performance and the wages offered by comparable companies, became a permanent addition to the employees' wages. Consequently, these wage increases were added to the employees' existing wage rates and resulted in a new "base wage." Raises in subsequent years were added to this base wage.

In 1990, across-the-board wage increases again were implemented. These increases, like the 1989 increases, became a permanent addition to the employees' wages. Although no wage increase was given in 1991, the pattern of awarding across-the-board wage increases continued in 1992, 1993 and 1994; each of these across-the-board wage increases became a permanent part of the employees' wages, resulting in a new base wage.

No wage increase was awarded in 1995. ACE/CO claimed that, in that year, it had abandoned across-the-board wage increases in favor of a new, merit- and training-based compensation system. The Board found, however, that, at least in 1995, ACE/CO's merit- and training-based wage increases were ancillary to, and not substitutes for, the across-the-board wage increases. The Board also determined that ACE/CO's failure to award across-the-board wage increases in 1995 was in retaliation for the employees' organizational activities and that ACE/CO therefore had violated sections 8(a)(1) and 8(a)(3) of the NLRA. Id. at 292-93. We sustained these determinations. See id. at 291-93.

After a subsequent substantial-compliance proceeding, the Board determined that, in 1996, ACE/CO had abandoned the use of across-the-board wage increases and had adopted a program that awarded wage increases based on merit and the completion of training programs. Therefore, reasoned the Board, the Company was not obligated to award additional across-the-board wage increases in 1996 or in subsequent years. Moreover, ruled the majority of the Board panel, the new merit-and training-based wage increases that were added in 1996 and the following years should be added to the employees' actual 1995 wage rates, which were not adjusted to include the twenty-five-cent-per-hour wage increase wrongfully denied to the workers in that year. The dissenting member of the Board took the view that, although the Company was permitted to change prospectively the manner in which it awarded wage increases after 1995, it must build those later increases on the adjusted base wage of the worker as of the end of 1995, a methodology that would incorporate the wrongfully denied wage increase into the employees' wages.

II DISCUSSION

In reviewing the Board's order, we must respect its "broad discretion to devise [a] remed[y] that effectuate[s] the policies of the [NLRA]." NLRB v. Intersweet, Inc., 125 F.3d 1064, 1067 (7th Cir. 1997) (citation and quotation marks omitted); see 29 U.S.C. § 160(c) (permitting the Board, upon finding that a party has engaged in an unfair labor practice, "to take such affirmative action including reinstatement of employees with or without back pay, as will effectuate the policies of [the NLRA]"). The Board's exercise of this discretion "is subject to only limited judicial review." NLRB v. Midw. Pers. Servs., Inc., 508 F.3d 418, 422-23 (7th Cir. 2007). Therefore, we shall "enforce the Board's order if its factual findings are supported by substantial evidence in the record as a whole and its legal conclusions have a reasonable basis in law." NLRB v. Midw. Pers. Servs., Inc., 322 F.3d 969, 976 (7th Cir.2003) (citing 29 U.S.C. § 160(e) and Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951)).

A.

Given this standard of review, we must begin our analysis with a careful, respectful study of the Board's opinion and the position that it takes in the brief that it has filed before us. In the Board's view, the Company must award compensatory back pay for its violation of the Act only for the hours actually worked by its employees in 1995. The evidence shows, the Board continues, that the Company switched from a policy of across-the-board increases to a policy of merit- and training-based increases in 1996. Therefore, it reasons, the 1995 wage increase need not be included in the base wage to which the 1996 merit increases are added. It relies heavily on our statement in UEW I that ACE/CO should be permitted to demonstrate that "it had abjured across-the-board raises ... [which would] suffice to excuse ACE/CO from making any adjustments for 1996, [and] it would also establish this new baseline for future years as well." UEW I, 230 F.3d at 296.

In reaching this conclusion, the Board undertook a detailed factual analysis and determined that ACE/CO lawfully had created a new compensation system in 1996. It assumed that, in 1996, the Company allocated all of the funds available for wage increases to merit- and training-based wage increases under the new compensation system. In the Board's view, the decision to award only merit-based increases constituted a new compensation system that "was not based on a `baseline' for bargaining unit labor costs that incorporated a 25-cent increase in 1995." Second Supplemental Decision and Order, 349 NLRB No. 18, slip op. at 2. In essence, the Board assumed that the 1996 compensation system would have been altered if the Company had made across-the-board increases in 1995. To support this view, the Board reasoned that, if ACE/CO had issued an across-the-board wage increase in 1995, it necessarily would have had less money available for merit- and training-based wage increases in 1996, and the amounts of those new wage increases necessarily would have been decreased as a result....