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G. Heileman Brewing Co. v. National Labor Relations Board

decided: July 19, 1989.


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

Flaum and Manion, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Eschbach

ESCHBACH, Senior Circuit Judge

The petitioner -- cross-respondent, G. Heileman Brewing Company, Inc. ("Heileman"), seeks review of a National Labor Relations Board ("NLRB" or "Board") order finding Heileman in violation of ยง 8(a)(1) and (5) of the National Labor Relations Act ("NLRA"). Conversely, the respondent -- cross-petitioner, the NLRB, seeks enforcement of its order. In its decision, the NLRB determined that Heileman wrongfully refused to bargain with Local Union 309 of the International Brotherhood of Electrical Workers ("Local 309") over its decision to terminate the services of Lowry Electric Company ("Lowry") and to subcontract its electrical maintenance work to Bienco Electric Company ("Bienco"). Therefore, the Board ordered Heileman to cease and desist from refusing to recognize or bargain with Local 309, to reinstate its former maintenance electricians with full back pay and seniority rights, and to post remedial notices.

On appeal, Heileman raises three issues. First, Heileman argues that it is not a joint employer with Lowry of the maintenance electricians working at its Belleville, Illinois brewery and thus, did not have an obligation to bargain with Local 309, which represented the electricians. Second, Heileman contends that even if it did have a duty to bargain, Local 309 waived its right to negotiate by unnecessarily waiting approximately six weeks before it made a demand upon Heileman to bargain. Finally, Heileman contends that our court should not enforce the Board's order because it is punitive in nature. For the reasons set forth below, we grant the NLRB's cross-application for enforcement of its order and deny Heileman's petition for review.


Carling National Breweries operated a brewery in Belleville, Illinois. Its employees at the brewery were represented by various unions, including Local 309 which represented its maintenance electricians. In 1979, Heileman acquired this brewery. Because it anticipated closing the brewery, Heileman negotiated a closing agreement with the unions.*fn1 The agreement provided that if Heileman should resume operations at the brewery, the collective bargaining agreements would go into effect for ninety days, after which they would be open to negotiations. Following its acquisition of the Belleville brewery, Heileman laid off the employees. A few months later, however, Heileman reopened the brewery and reinstated its former employees, including the maintenance electricians, in accordance with the closing agreement. Heileman then immediately sought to renegotiate its collective bargaining agreements with all the unions except Local 309. Heileman requested that the maintenance electricians work under an extension of their previous collective bargaining agreement until Heileman first negotiated new contracts with the other unions.

In early 1980, after Heileman had entered into new collective bargaining agreements with the other unions, it began negotiations with Local 309. During the negotiations, Heileman proposed subcontracting its electrical maintenance work. Heileman wanted to use subcontracting as a way of justifying to the other unions why the maintenance electricians received a higher rate of pay. Although Local 309 had some reservations, it did not oppose subcontracting the electrical maintenance work. Heileman and Local 309 then negotiated the terms under which Heileman would subcontract. They agreed that the maintenance electricians currently employed by Heileman would be transferred to the subcontractor's payroll with their current seniority status and that Heileman would choose only a firm that was a signatory to the area contract between Local 309 and the local chapter of the National Electrical Contractors Association ("NECA"), a multi-employer bargaining association. Heileman and Local 309 further agreed to specific exceptions to the NECA contract, such as starting times, that would govern the maintenance electricians working at Heileman's brewery. Heileman and Local 309, however, did not reduce their agreement to writing.

Instead, Heileman chose its subcontractor, Lowry. On August 5, 1980, Local 309 and Lowry entered into an agreement as an addendum to the NECA contract. This addendum incorporated all the terms of subcontracting the electrical maintenance work at the brewery to which Local 309 and Heileman had agreed. The addendum also specifically provided that it would run concurrently with the NECA contract. The next day, Heileman and Lowry entered into their subcontracting agreement, which specifically provided that Lowry would perform all electrical maintenance work according to the terms of the addendum. After Heileman and Lowry had entered into the subcontracting agreement, the maintenance electricians, who had formerly worked for Heileman, became Lowry employees, and Lowry assigned them to work at Heileman's brewery.*fn2

Although Lowry was technically in charge of the maintenance electricians, Lowry supervisors rarely came to the brewery to check on them. Rather, it was Heileman that apparently exercised supervisory authority over the maintenance electricians on the infrequent occasions when such supervision became necessary. Heileman decided, without informing Lowry, when the maintenance electricians would work overtime. Heileman also notified Lowry when it was dissatisfied with a particular maintenance electrician's work. Additionally, Heileman treated the maintenance electricians as if they were still Heileman employees. For example, the maintenance electricians used the same time cards, time clock, lunchroom, and lockers as the Heileman employees. The maintenance electricians also participated in company programs just like Heileman's employees. Indeed, the maintenance electricians, who were transferred from Heileman to Lowry, never worked for Lowry other than at Heileman's Belleville brewery.

By 1984, Heileman became concerned about the rising cost of subcontracting its electrical maintenance work with Lowry pursuant to the NECA contract and the Lowry-Local 309 addendum. Local 309 became aware that Heileman was talking to other subcontractors. In August 1984, at Heileman's request, Heileman and Lowry renewed their subcontracting agreement only until December 31, 1984, instead of the usual two-year period. Apparently, this shortened renewal period was due to Heileman's concerns over its cost of subcontracting its electrical maintenance work. In late August, when Local 309 and Lowry renewed their addendum, Lowry informed the union that its agreement with Heileman was renewed only until the end of the year. Local 309 told Lowry that it would go along with that arrangement.

In mid-November 1984, two Heileman officials, plant manager Allen Lacombe and industrial relations manager Charles Rhein, met with Oliver Hartman and George Fisher from Lowery. At this meeting, Lacombe told the Lowry officials that Heileman wanted a nonnegotiable $5.00 per hour reduction in the maintenance electrician's base wage rate.*fn3 Lacombe then asked Hartman to check with Local 309 to see whether it would accept this pay reduction. Shortly thereafter, Hartman and Fisher met with Local 309's assistant business manager, James Hankins, and notified him of Heileman's demand. Although Hankins did not think the pay reduction would be acceptable to Local 309, he indicated that he would get back in touch with them. In late November, Lacombe called Hartman to inquire whether Local 309 had given Lowry a firm response; Lowery, however, had not yet heard from Local 309.

On December 26, 1984, after more than a month's delay, Local 309 informed Lowry that the $5.00 per hour pay reduction was unacceptable to Local 309. However, Local 309 was willing to assemble a package of cuts worth $2.40 per hour that would not be in the base wage rate. Lowry promptly presented the union's counteroffer to Heileman, which would not accept it. Heileman also dismissed Lowry's suggestion that Heileman talk directly with Local 309. On December 28, Local 309 presented a second offer to Lowry in which the union would agree to a reduction of $2.50 to $3.00 per hour (not in the base wage rate) so long as Heileman would sign a document acknowledging its status as a joint employer of the maintenance electricians and its duty to bargain with Local 309. When Lowry informed Heileman of this proposal, Heileman not only rejected the offer, but also told Lowry that it would not be renewing Lowry's subcontracting agreement after it expired on December 31. Finally, on December 31, 1984, Local 309 asked Lowry to inform Heileman that Local 309 would be willing to take a pay reduction of $2.50 per hour, without Heileman signing a document acknowledging its status as a joint employer or its duty to bargain with Local 309. Once again, Heileman rejected the proposal.

On January 1, 1985, Heileman entered into a subcontracting agreement with Bienco, which did not have a collective bargaining agreement with Local 309. Bienco immediately supplied its own maintenance electricians to work at the brewery. On January 3, 1985, Local 309 sent a letter to Heileman demanding that it ...

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