W.W. Grainger, Inc. v. N.L.R.B.

• Decision Date: 26 October 1988
• Docket Number: 88-1096,Nos. 87-3012,s. 87-3012
• Citation: 860 F.2d 244
• Parties: 129 L.R.R.M. (BNA) 2718, 110 Lab.Cas. P 10,799 W.W. GRAINGER, INC., Petitioner-Appellant, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 244

860 F.2d 244

129 L.R.R.M. (BNA) 2718, 110 Lab.Cas. P 10,799

W.W. GRAINGER, INC., Petitioner-Appellant, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Appellee.

Nos. 87-3012, 88-1096.

United States Court of Appeals, Seventh Circuit.

Argued June 2, 1988.

Decided Oct. 12, 1988.

As Amended Oct. 26, 1988.

Harry Sangerman, McDermott Will & Emery, Chicago, Ill., for petitioner-appellant.

Steven Goldstein, N.L.R.B., Washington, D.C., for respondent-appellee.

Before POSNER, COFFEY, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

Petitioner W.W. Grainger, Inc. seeks review of an order by the National Labor Relations Board ("Board") finding it in violation of Sec. 8(a)(5) and Sec. 8(a)(1) of the National Labor Relations Act ("NLRA"). The Board, in turn, cross-petitions for enforcement of its order directing Grainger to bargain with Teamsters Local 710. Because we find that Local 710 waived its bargaining rights by repeatedly failing to assert them against Grainger, we decline to enforce the Board's order.

W.W. Grainger, Inc. is a wholesale distributor of industrial products and equipment. It uses various means of transporting its products to retail outlets including trucks. Although Grainger owns a fleet of tractors, it leased trailers and drivers. The drivers' services are leased from driver leasing companies.

In 1974, Grainger entered into a driver leasing contract with Rentar, Inc., which provided Grainger with the services of twenty drivers. By leasing its drivers from Rentar, Grainger hoped to avoid the complexities of the trucking industry which is both heavily regulated and subject to extensive labor agreements between trucking firms and the Teamsters. Indeed, Rentar was a signatory to a labor agreement with Teamsters Local 710, which represented all 20 drivers eventually assigned to Grainger.

Over the course of the six years Grainger had a contract with Rentar, Grainger became increasingly dissatisfied with Rentar's service, in part because Rentar was not controlling the drivers' methods of reporting mileage and thus not controlling Grainger's costs. In other words, drivers were overinflating mileage reports to earn more pay. ¹ Since Rentar's commission was also based on the drivers' mileage, it had no incentive to correct the problem.

In 1979, Grainger asked Rentar to impose a uniform mileage system whereby the amount charged for a trip between two points would always be the same. When Rentar appeared unwilling or unable to implement such a system, Grainger informed Rentar it was considering terminating the contract. Rentar then took Grainger's request to the drivers in early 1980, and told them that the Grainger contract would be cancelled if no uniform system was adopted. The drivers responded by suggesting a trade-off. In return for a uniform mileage system, the drivers requested compensation for "branch time"--non-driving time spent at either Grainger distribution points or at retail destinations. Grainger refused to compensate drivers for branch time and avoided doing so by telling the drivers to go off-duty.

When Grainger refused to consider the suggested trade-off, the drivers attempted to formulate a compromise, by accepting the uniform mileage system in return for compensation for any branch time over four hours. ² However, not all drivers approved this proposal and it ultimately failed. Two of the drivers assigned to Grainger then contacted Local 710 to ask whether they were entitled to compensation for branch time. Local 710 assured the drivers that they were entitled to compensation and called Rentar to ascertain that Rentar would pay. When Rentar failed to respond, Local 710 again called and threatened to grieve against Rentar under their collective bargaining agreement.

At this point, Rentar informed the union that Grainger would not pay for any branch time. Local 710 retorted that its contract was with Rentar not Grainger, and that Rentar would have to abide by the bargaining agreement. Rentar next suggested to the union that another compromise be offered to Grainger, but hastened to add that it stood a good chance of losing the Grainger contract if the drivers continued to insist on payment for branch time.

Matters came to a head when, on March 4, 1980, a driver requested payment for Grainger branch time from Rentar. A grievance was filed and the arbitrator found Rentar liable for the branch time because the driver had never been told to go off-duty. Treating this as a sign that they were all entitled to compensation for branch time, all the other drivers assigned to Grainger also requested payment for their branch time from Rentar. Rentar agreed to pay the drivers but was unable to get reimbursement from Grainger. In May, 1980, Rentar informed Grainger that Grainger could no longer tell drivers to go off-duty and that Grainger would have to pay for branch time.

The drivers, Rentar, and Grainger eventually reached an impasse. At that point, Grainger approached another driver leasing company, TDI, which offered to provide drivers to Grainger on more reasonable terms. ³ Having received signals from Grainger that Grainger was considering doing business with TDI, the president of TDI contacted Local 710 in the middle of May, 1980, and indicated that it was in a position to take over the Grainger account. The union agreed to meet with TDI. On May 26, 1980, shortly before the meeting took place, Grainger gave Rentar notice of cancellation pursuant to a 30-day notice provision in the contract. Rentar, in turn, immediately notified Local 710.

TDI then approached the soon-to-be unemployed Rentar drivers and explained that if they were willing to accept partial payment for branch time, they could continue driving for Grainger but through TDI. Although the drivers at first agreed to a compromise, which called for a partial payment of branch time, they eventually reneged on their agreement.

Local 710 then filed a grievance against Grainger, Rentar, and TDI individually and in their capacity as co-employers, alleging that they had threatened Rentar employees in violation of Sec. 8(a)(1) of the NLRA, laid-off and refused to reinstate employees in violation of Secs. 8(a)(1) and (3), and failed to bargain with the union over the cancellation of the Rentar contract in violation of Secs. 8(a)(1) and (5).

Following an extensive administrative proceeding, the Administrative Law Judge ("ALJ") determined that Grainger and Rentar were not co-employers because they did not share substantial control over the drivers. The ALJ found that Grainger therefore was not required to negotiate with Local 710 before cancelling its contract with Rentar. Even if Grainger could have been considered a co-employer with Rentar, the ALJ found that Grainger had no duty to negotiate with Local 710 because the decision to cancel the contract with Rentar was not related to labor costs but rather to Rentar's poor managerial performance. Finally, the ALJ found the union had, in any event, waived any bargaining rights it might have had since it never once asked Grainger to bargain about any of the issues underlying the cancellation of the contract with Rentar. The ALJ therefore dismissed Local 710's grievance in its entirety.

The ALJ's findings were appealed to the Board. Although the Board acknowledged that it was required to accord the ALJ's factual determinations due deference, it gave those findings a different interpretation with respect to whether Grainger was required to bargain with Local 710. ⁴ The Board ruled that Grainger exercised sufficient control over the drivers to be considered a co-employer. Additionally, the Board found Grainger had a duty to negotiate about the cancellation of the Rentar contract since the dispute, underlying that cancellation, centered on labor costs. The Board concluded that Local 710 had not waived its bargaining rights because when Grainger announced its cancellation of the contract, the matter was already a foregone conclusion and any request to bargain would have been futile. The Board then ordered Grainger to bargain with the union and to cease interfering with the union.

Grainger argues the Board erroneously disregarded the ALJ's factual determinations in reaching the conclusion that Grainger was a co-employer with Rentar. The ALJ found that to the extent Grainger exercised control over the Rentar drivers, it was required to do so under federal law. Most of the non-statutory control remained with Rentar. Thus, Grainger and Rentar could not be considered co-employers.

The Board points out that it is entitled to draw its own legal conclusions from the ALJ's factual findings and that its conclusions must be accorded deference as long as they are rationally related to the facts. According to the Board, there are more than sufficient facts to support its determination that Grainger and TDI exercised joint control over the drivers and are therefore joint employers.

Whether two separate entities exert sufficient control over one group of employees to be treated as joint employers for purposes of the NLRA, is a factual question depending largely on such factors as the supervision of the employees' day-to-day activities, authority to hire or fire employees, promulgation of work rules and conditions of employment, work assignments, and issuance of operating instructions. Boire v. Greyhound Corp., 376 U.S. 473, 84 S.Ct. 894, 11 L.Ed.2d 849 (1964); NLRB v. Browning-Ferris Indus., 691 F.2d 1117, 1121-23 (3d Cir.1982). Whether two entities are joint employers depends on whether the employer claimed to be a joint employer, "possessed sufficient control over the work of the employees to qualify as a joint employer with [the actual employer]." Cf. Boire, 376 U.S. at 481, 84 S.Ct. at 899. Because the issue of joint employer status is a factual determination, the Board's decision that two employers are joint employers is entitled to deference if supported by the record as a whole....