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American Cyanamid Co. v. National Labor Relations Board

decided: February 2, 1979.

AMERICAN CYANAMID COMPANY, PETITIONER,
v.
NATIONAL LABOR RELATIONS BOARD, RESPONDENT.



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

Before Cummings, Lay*fn* , and Wood, Circuit Judges.

Author: Cummings

In mid-April 1975 the Union*fn1 commenced a lawful economic strike at American Cyanamid Company's (CompaFortier plant in Westwego, Louisiana. The Board found that as a result of the ensuing events, the Company had violated Section 8(a)(5) and (1) of the National Labor Relations Act (29 U.S.C. § 158(a)(5) and (1)) by contracting out unit maintenance and service work on a permanent basis without notifying and bargaining with the Union, thereby converting the strike to an unfair labor practice strike. The Board also found that the Company refused to reinstate striking employees upon their unconditional offer to return to work, thereby violating Section 8(a)(3) and (1) (29 U.S.C. § 158(a)(3) and (1)), and that the Company insisted that the Union sign a settlement agreement waiving statutory rights before the Company would reinstate any of the former strikers. This insistence was held to violate Section 8(a)(5), (3) and (1) (29 U.S.C. § 158(a)(5), (3) and (1)). Consequently, the Board required the Company to rescind its January 9, 1976, agreement permanently contracting out unit maintenance and service work at the Fortier plant, to offer reinstatement to certain employees and to make them whole for any loss of earnings. See 235 National Labor Relations Board No. 188. The Company has asked us to set aside the order of the Labor Board and it in turn has filed a cross-application for enforcement of its order. We have concluded that the Board's order should be enforced in full.

The most recent collective bargaining agreement between the Company and Union with respect to the Company's Fortier plant was effective from April 15, 1973, to April 15, 1975. The bargaining unit included approximately 460 employees. About 200 of these were maintenance and service employees and the remainder were engaged in some aspects of production (see note 1 Supra ). The parties started negotiating for a new contract on February 25, 1975, but no agreement was reached. On April 13, 1975, in accord with the contract's forty-eight hour notice requirement, the Union gave the Company notice of its intent to strike. The strike of these 460 employees began on April 17, 1975. During the lengthy strike the Company operated the Fortier plant with supervisory and other salaried personnel and employees of Payne & Keller, Inc., an independent contractor, while the parties continued to bargain. The Board found that on January 9, 1976, the Company decided to contract its maintenance and service work at the Fortier plant on a permanent basis with Payne & Keller and so advised that concern. The contract was terminable at will.*fn2

At a January 22 bargaining session with the Union, the Company first informed the Union that it had decided (1) to eliminate its maintenance and service department by permanently contracting out that work and (2) to hire permanent replacements for the striking production employees as soon as possible.

At a January 28, bargaining session, the Company notified the Union that effective January 31, 1976, all functions performed by the maintenance and service departments at the Fortier plant "will be awarded to a contractor (Payne & Keller) on a permanent basis," that all hourly employees who had worked in those two departments would be permanently terminated effective January 31, and that all other striking employees would be terminated "as soon as their permanent replacements had been obtained."

The Board found that at the conclusion of the January 28 meeting, the Union told the Company that the Union was terminating the strike and making an unconditional offer to return to work. The Company's spokesman, Harold Walker, then told Union representative Palmer that Walker would let the Union know in a day or two when the employees should report for work. Both the Local and the International Union immediately confirmed by letter that the strike was terminated and made an unconditional offer, on behalf of all striking employees, to return to work.

The Union met with the striking employees, providing them with letters stating that they were unconditionally offering to return to work, and advised them to sign the letters and bring them to the plant the following morning. When 350 Union-represented employees presented themselves at the Fortier plant gate to commence work on January 29, they were told that the Company was not going to allow them to return to work until there was a signed agreement with the Union. Two days thereafter the Company notified all maintenance and service employees that their jobs had been terminated.

At another bargaining session on February 2, the Company's industrial relations director, Eugene J. Dean, Jr., said that the Company was prepared to offer the Union a Return-to-Work and Strike Settlement Agreement. Union representative Palmer reiterated that the strike had ended and that the employees had offered unconditionally to return to work. After a recess, the Company presented its proposed Return-to-Work and Strike Settlement Agreement. After another recess, a Union attorney told the Company that the proposed agreement was not acceptable "in its entirety" because it required a waiver of certain employee and Union rights and because it required the Union to forsake its right to strike for a year, which would impair the Union's bargaining power in obtaining a collective bargaining contract. The Union attorney again emphasized that the strike was over, that the employees had offered to return to work unconditionally, that they would work for a reasonable time without further strike action, and that the Union was amenable to giving assurances of its intention not to strike for a reasonable time.

After another recess, Dean announced for the Company that it regarded the one year no-strike period as a minimum and that because the Union had rejected the settlement agreement its unconditional offer to work was really a conditional offer. In reply, the Union's attorney said he was not converting the employees' offer to return to work into a conditional offer, that the strike was over and that the Company was entitled to an orderly resumption of production and a guarantee of a reasonable time of continued operation before any new strike would take place. The meeting ended with no agreement being reached.

On February 2, 1976, the Union filed charges that the Company had committed unfair labor practices within the meaning of the National Labor Relations Act, a complaint was issued on August 26, and the case was tried before an Administrative Law Judge (ALJ) on three days in November and one day in December 1976. Citing especially Fibreboard Paper Products Corp. v. National Labor Relations Board, 379 U.S. 203, 85 S. Ct. 398, 13 L. Ed. 2d 233 and Westinghouse Electric Corp., 150 National Labor Relations Board 1574 (1965),*fn3 the ALJ found that by permanently contracting out the maintenance and service work at its Fortier plant on January 9, 1976, the Company violated Section 8(a)(5) and (1) of the Act and had converted the economic strike of its employees into an unfair labor practice strike. She also found that the Company violated Section 8(a)(3) and (1) of the Act by refusing the January 28, 1976, unconditional offer of the unfair labor practice strikers to return to work. Finally, she found that the Company violated Section 8(a)(5), (3) and (1) by imposing unlawful conditions upon the employees' return, "including its insistence that the Union waive bargaining rights and employees' rights to redress under the Act." Subsequently, the Labor Board adopted the ALJ's recommended order which required the Company to rescind the contract with Payne & Keller for the maintenance and service work at the Fortier plant and to restore the mode of operation existing in the bargaining unit before that work was permanently contracted out on January 9, 1976. The Company was also ordered to offer reinstatement to all employees engaged in the unfair labor practice strike who were not permanently replaced while they were economic strikers and to make them whole for any loss of earnings they may have suffered by the Company's failure to reinstate them upon their January 28, 1976, application.*fn4 Additionally the Company was ordered to bargain with the Union upon request and to embody any understanding reached in a signed agreement. The customary posting of prescribed notices was required too. In our judgment this order was permissible.

The Company's Contracting Out Unit Work

As noted, the Labor Board found that the Company violated Section 8(a)(5) and (1) of the Act on January 9, 1976, by unilaterally contracting out the unit maintenance and service work permanently without bargaining with the Union. Section 8(a)(5) makes it an unfair labor practice for an employer to refuse to bargain collectively with its employees' representatives, while Section 8(a)(1) makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their rights guaranteed by Section 7 of the Act.*fn5 In Fibreboard Paper Products Corp. v. National Labor Relations Board, 379 U.S. 203, 85 S. Ct. 398, 13 L. Ed. 2d 233, the Supreme Court held that the contracting out of work previously performed by members of an existing bargaining unit is a subject about which the Act requires employers and the representatives of their employees to bargain collectively. The Court also held that the Labor Board could properly direct the employer to resume its maintenance operations, reinstate the employees with back pay, and bargain with the Union. Here the Company agreed on January 9, 1976, to contract out permanently the unit maintenance and service work without notifying and bargaining with the Union. Therefore, under Fibreboard the Board was empowered to issue the remedial order imposed upon the Company.

To avoid this result, the Company urges that the bargaining obligation did not exist because the decision to contract out was for legitimate business reasons. Such an argument was rejected in Fibreboard because national labor policy required that the existing employees be given an opportunity to negotiate a mutually acceptable alternative to the employer's contracting the work out. 379 U.S. at 214, 85 S. Ct. 398.*fn6 Here the Company's decision to contract out its maintenance operations permanently terminated the jobs of 200 employees, almost half the total bargaining unit represented by the Union. Fibreboard requires us to hold that the ...


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