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International Union v. National Labor Relations Board

decided: October 3, 1986.


Petition for Review of an Order of the National Labor Relations Board.

Posner and Easterbrook, Circuit Judges, and Campbell, Senior District Judge.*fn*

Author: Posner

POSNER, Circuit Judge.

The United Automobile Workers ask us to vacate a decision by the National Labor Relations Board dismissing the union's charge that National Lock Corporation refused to bargain in good faith over the movement of operations at one of its plants to another state, in violation of sections 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. §§ 158(a)(1) and (5). The Board held that the union had waived any statutory right it might have had to bargain over the move. National Metalcrafters, Inc., 276 NLRB No. 14 (Aug. 27, 1985).

Workers represented by the union made locks and other hardware at the company's plant in Rockford, Illinois. Section 1.1(b) of the collective bargaining agreement provided that "in the event the Company contemplates the relocation of any of its operations conducted at its present divisions in Rockford, Illinois, the Company agrees to discuss such relocation in advance and to negotiate with the Union concerning the effect of such relocation on employees." Faced with high production (including labor) costs in Rockford, and unable to obtain wage concessions from the union, the company decided to move some of its manufacturing to Mauldin, South Carolina, with the result that hundreds of workers lost their jobs. The company told the union about the impending move but did not bargain over it; hence the unfair labor practice charge. The company did bargain over the effects of the move on the workers, for it concedes that the word "negotiate" in the last part of section 1.1(b) means bargain. But it would not bargain over whether to relocate.

At the hearing before the administrative law judge on the union's unfair labor practice charge, oral testimony was taken on the background and purpose of section 1.1(b). The union's witnesses testified that it had been included in order to make sure that the union would have first crack at organizing the workers at the new plant; in a previous relocation by the company, the union had lost out to a rival union in the race to organize them. The union's witnesses denied there had been any discussion of waiving the union's statutory right to bargain over plant relocations. In contrast, Carter, who had negotiated the contract for the company and had drafted section 1.1(b), testified that in the negotiations he had told the union that the company would not agree to any restriction on its right to relocate work, and that the word "discuss" had been used advisedly, and meant "notify" rather than "negotiate" or "bargain." The company also pointed out that in previous cases of relocation the union had not asserted any right to bargain. But the union countered that those relocations had not resulted in a loss of jobs at the Rockford plant; the workers made surplus by the move had been given other jobs there.

The administrative law judge, saying he disbelieved Carter's testimony and believed that of the union's witnesses, concluded that the word "discuss" had not been intended as a waiver of the union's statutory right to bargain over a relocation motivated by wage concerns; hence the company had committed an unfair labor practice. The Board reversed. While upholding all of the findings on credibility that the administrative law judge had made, the Board held that the bargaining history (presumably the union's failure to have requested bargaining over the previous relocations), in conjunction with the "plain meaning" of the word "discuss" when juxtaposed with "negotiate" in section 1.1(b), demonstrated that the union had waived the right to bargain.

The administrative law judge's opinion contains a number of errors and omissions, and his credibility findings are suspect because based in part on the union's having produced several witnesses to the negotiation of section 1.1(b) and the company only one, Carter; no other significance can be attached to the administrative law judge's disparaging reference to the lack of "corroboration" for Carter's testimony. So this is not a case where a strong initial decision opposite to the Board's decision requires us to consider the evidentiary and analytical basis of the Board's decision requires us to consider the evidentiary and analytical basis of the Board's decision with special care. See, e.g., Universal Camera Corp. v. NLRB, 340 U.S. 474, 496, 95 L. Ed. 456, 71 S. Ct. 456 (1951); Mattes v. United States, 721 F.2d 1125, 1129 (7th Cir. 1983). Nor is the conclusion that the Board reached an unreasonable one. A natural reading of section 1.1(b) is that the company agrees merely to discuss with the union in advance, but does not agree to bargain over -- in the technical sense in which the word "bargain" is used in the National Labor Relations Act, see 29 U.S.C. § 158(a)(5); NLRB v. Katz, 369 U.S. 736, 8 L. Ed. 2d 230, 82 S. Ct. 1107 (1962) -- any contemplated relocation of operations. All that the company agrees to bargain over (the parties equate "negotiate" in section 1.1(b) to "bargain" in the technical sense) is what to do with the workers made redundant by the relocation. Although section 1.1(b) is found in the article of the collective bargaining agreement that deals with recognition of the union rather than with bargaining, the title of the article, "Recognition, Union Security, and Checkoff," is boilerplate. The article may just have been a convenient parking place for a section actually designed to regulate comprehensively and exhaustively the moving of operations from one plant to another.

The Board's opinion, however, is perfunctory, incomplete, and inconsistent. The Board has the unfortunate habit of writing opinions in the form of commentaries (usually in footnotes, though here there was text as well) on the administrative law judge's always much longer and more comprehensive opinion. Maybe the Board's workload is too heavy to allow anything better but that will not permit us to uphold a decision for which the Board has failed to provide a coherent rationale. See, e.g., Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197, 85 L. Ed. 1271, 61 S. Ct. 845 (1941); Friendly, Chenery Revisited: Reflections on Reversal and Remand of Administrative Orders, 1969 Duke L.J. 199, 206-09.

The basic flaws in the Board's analysis are three:

1. Its opinion leaps illogically from the proposition that the "plain meaning" of "discuss" is not "bargain" to the conclusion that the union waived its statutory right to bargain over plant relocations. Overlooked is the possibility that the "discuss" clause has a different domain from the statutory right and can coexist with it. The Supreme Court has not yet decided whether and in what circumstances a company must bargain with a union over the decision to relocate operations. See First Nat'l Maintenance Corp. v. NLRB, 452 U.S. 666, 686 n. 22, 69 L. Ed. 2d 318, 101 S. Ct. 2573 (1981), and the interesting commentary on the decision in Alchian, Decision Sharing and Expropriable Specific Quasi-Rents: A Theory of First National Maintenance Corporation v. NLRB, 1 Sup. Ct. Econ. Rev. 235 (1982). But the lower federal courts and the Labor Board hold, and we do not understand National Lock Corporation to contest, that a company must bargain if the decision to relocate is significantly motivated by concern over labor costs, though not (and this the union does not contest) if it is based mainly on factors other than labor, such as a desire to economize on shipping costs. See, e.g., Otis Elevator Co., 269 N.L.R.B. 891 (1984). Even if the present case is of the second rather than first type, so that the union had no statutory right to demand that the company bargain over the decision to relocate, the union might be eager to know about the relocation in advance so that it could sign up the workers at the new plant ahead of any other union. It thus might want the company to agree to "discuss" (not bargain over) all relocations in advance, including those not covered by the statutory right to bargain. For presumably a contractual duty to discuss would entitle the union to obtain specific information -- say about the work force at the new plant -- that would give it an organizing edge over rival unions.

In exchange for this right of notice the union may or may not have given up its statutory right to bargain -- a stronger right, but applicable to fewer relocations, and perhaps therefore on balance less valuable to the union. But one cannot just assume, as the Board did, that because section 1.1(b) is about relocations and does not create a duty to bargain (except over the effects of the relocation -- and the difference between "decision" bargaining and "effects" bargaining is well recognized, see, e.g., First Nat'l Maintenance Corp. v. NLRB, supra, 452 U.S. at 677 n. 15, 681-82), the section supplants the statutory right to bargain over a relocation decision based at least in part on labor costs. Someone who believed the testimony of the union's witnesses would probably conclude that the union had not waived its statutory right. That testimony indicates that the negotiations over the "discuss" clause were limited to the matter of giving the union advance notice in order to help it organize the new plant, that Carter drafted the clause as a gesture of good will toward the union, and that he demanded no concessions in return (for what was it to him which union got first crack at organizing the workers at the new plant?) and certainly did not demand a waiver of the union's statutory right to bargain. All this would matter little if one believed Carter instead, but that route is closed off by the Board's having upheld the administrative law judge's findings on credibility.

The Board itself said in its opinion, "It is undisputed that the clause was designed solely to accommodate the Union's desire to have the first opportunity to organize new employees at any new facilities created by National." 276 N.L.R.B. No. 14, at 6 (emphasis added; footnote omitted). If so, the statutory right to bargain was not affected; for to conclude that the clause also waived that right would be to assign a dual, not a single, purpose to the clause.

2. The Board's opinion omits mention of the traditionally stringent test for whether a party to a collective bargaining contract has waived a statutory right. The courts and the Board have held over and over again that evidence that the parties intended to waive a statutory right must, to be credited, be clear and unmistakable. See, e.g., Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708 n. 12, 75 L. Ed. 2d 387, 103 S. Ct. 1467 (1983) (and cases cited there), International Brotherhood of Electrical Workers, Local 1466 v. NLRB, 254 U.S. App. D.C. 105, 795 F.2d 150, 155-56 (D.C. Cir. 1986); Tocco Division of Park-Ohio Industries, Inc. v. NLRB, 702 F.2d 624, 626-27 (6th Cir. 1983); Road Sprinkler Fitters Local Union No. 669 v. NLRB, 195 U.S. App. D.C. 104, 600 F.2d 918, 921-23 (D.C. Cir. 1979); Teledyne Wisconsin Motor, 275 NLRB No. 76 (May 24, 1985); International Union of Operating Engineers, Local Union 18, 238 N.L.R.B. 652 (1978); Awrey Bakeries, Inc., 217 N.L.R.B. 730, 733 (1975), aff'd, 548 F.2d 138 (6th Cir. 1976) (per curiam); Weltronic Co., 173 N.L.R.B. 235, 237 (1968), aff'd, 419 F.2d 1120 (6th Cir. 1969); Unit Drop Forge Division, 171 N.L.R.B. 600, 601 (1968), modified on other grounds, 412 F.2d 108 (7th Cir. 1969); Rockwell-Standard Corp., 166 N.L.R.B. 124, 132 (1967), aff'd, 410 F.2d 953 (6th Cir. 1969); C & C Plywood Corp., 148 N.L.R.B. 414, 416 (1964), ...

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