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Titanium Metals Corporation v. National Labor Relations Board

November 30, 2004


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

Before: Edwards and Randolph, Circuit Judges, and Williams, Senior Circuit Judge.

The opinion of the court was delivered by: Edwards, Circuit Judge

Argued October 15, 2004

In a decision issued on September 30, 2003, the National Labor Relations Board ("Board" or "NLRB") held that Titanium Metals Corporation ("TIMET") violated § 8(a)(1) of the National Labor Relations Act ("NLRA" or "ACT"), 29 U.S.C. § 158(a)(1) (2000), when the company first issued a warning, then suspended, and finally discharged employee David W. Smallwood in May 1999 for poor work performance, failing to cooperate in a related investigation, distributing a newsletter, and encouraging other employees at TIMET to call him during working hours. The Board also found that TIMET violated § 8(a)(1) of the Act by denying Smallwood's request for union representation during an interview regarding his discipline and by maintaining and enforcing an overly broad no-solicitation/nodistribution rule.

The Board's decision on the disputed disciplinary actions rests principally on its findings that Smallwood's publication and distribution of a newsletter constituted "protected concerted activity" under § 7 of the Act, 29 U.S.C. § 157; that TIMET was motivated to discipline Smallwood because of his publication and distribution of the newsletter in 1999; and that Smallwood's publications did not lose the protection of the Act, because the cited articles did not disparage the employer, advocate violence, recklessly disregard the truth, or include material that was maliciously false.

In reaching this decision, the Board declined to defer to a grievance settlement reached by TIMET and the United Steelworkers of America, Local 4856, AFL-CIO ("Union") under their collective bargaining agreement. The Union had pursued a grievance to challenge the grounds of the disciplinary actions taken against Smallwood. Following deliberations between TIMET and Union officials, the parties entered into a Letter of Understanding in which they agreed that Smallwood was properly dismissed for "insubordination, inappropriate conduct toward the Company and supervisory employees, ongoing and costly workmanship related infractions, [and] providing misleading and inaccurate information related to melting incident investigations," and that Smallwood "was not discharged for engaging in protected activities under the NLRA." The Board specifically refused to accept a finding by the Administrative Law Judge ("ALJ") that the parties' grievance settlement was "repugnant to the purposes and policies of the Act." The Board nonetheless declined to defer to the parties' grievance settlement, because, in the Board's view, the Letter of Understanding failed to satisfy the applicable standards of fairness and regularity. See Spielberg Mfg. Co., 112 N.L.R.B. 1080, 1082 (1955); Alpha Beta Co., 273 N.L.R.B. 1546, 1547 (1985), petition for review denied sub nom. Mahon v. NLRB, 808 F.2d 1342 (9th Cir. 1987).

TIMET petitions for review of the Board's decision and the NLRB cross-applies for enforcement of its order. TIMET does not challenge the Board's findings that it violated § 8(a)(1) by questioning Smallwood in the absence of a Union representative and by maintaining and enforcing an overly broad no-solicitation/no-distribution rule. Instead, TIMET contends that the Board misapplied established law in refusing to defer to a settlement reached by TIMET officials and Smallwood's union representatives, where the settlement was reached pursuant to the parties' lawful grievance procedures, Smallwood had no right under the agreement to approve a grievance settlement, the Board declined to endorse the ALJ's finding that the parties' settlement was "palpably wrong" or otherwise "clearly repugnant" to the purposes and policies of the Act, and there is no claim that the Union breached its duty of fair representation. We hold that, under these circumstances, the Board clearly erred in declining to defer to the settlement agreement between TIMET and the Union. In light of this holding, the Board's holding that TIMET violated § 8(a)(1) in disciplining Smallwood is vacated and TIMET's challenge to that holding is dismissed as moot.


TIMET, a Delaware corporation, is engaged in the fabrication of titanium metal ingots at its Henderson, Nevada facility. At all times relevant to this case, TIMET and the Union were parties to a collective bargaining agreement that covered production and maintenance employees. See Titanium Metals Corp., 340 N.L.R.B. No. 88 (Sept. 30, 2003), slip op. at 1, 4, reprinted in Joint Appendix ("J.A.") 355, 355, 358, available at 2003 WL 22295370. The collective bargaining agreement provided for a four-step grievance-arbitration procedure. At step one, an aggrieved employee, or Union representatives acting on the employee's behalf, could discuss the matter with the employee's foreman or supervisor. If a grievance was "not adjusted to the satisfaction of the Union in Step 1," the Union had the option of presenting the grievance in writing to the Human Resources Manager and attempting to resolve it with the department manager at the second step of the grievance procedure. Collective Bargaining Agreement Between Titanium Metals Corporation and United Steelworkers of America (1996), ¶ 11:19, J.A. 237. If a grievance remained unresolved, the Union had the option of proceeding to step three, which involved a written appeal to the Human Resources Manager. Under the agreement, a "representative of the Union shall have the authority to settle or withdraw any Union grievance in Step 3." Id. ¶ 11:20, J.A. 238. Finally, if a grievance was unresolved after step three, the Union could appeal the matter to arbitration. Id. ¶ 11:22, J.A. 238. The agreement did not require the Union to consult with, or obtain approval from, an aggrieved employee before settling a grievance or deciding whether to appeal a matter to arbitration.

Smallwood began working for TIMET in July 1994. Beginning in October 1996, Smallwood was employed as a furnace operator in the melt department. Titanium Metals, slip op. at 4, J.A. 358. From May 1997 through November 1997, and again in late March and May 1999, Smallwood published a newsletter, which he distributed to approximately 20 of TIMET's melt department employees at their homes and to the Union at its office. The newsletter was widely read and circulated in the melt department. Id. The Board found that "[t]he newsletter was usually about six pages long and contained articles of general interest as well as those dealing with wages, hours, and working conditions at the Henderson facility, many of which were critical of supervisors and [TIMET's] labor-management policies." Id.

On December 22, 1997, TIMET issued a written warning to Smallwood for violating the company's harassment-free workplace policy based on his written and verbal comments. In response to the warning, Smallwood stopped disseminating the newsletter until late March 1999, when he published a new edition. Smallwood received another written warning on May 25, 1999. The May 25 warning stated that Smallwood was being disciplined for: (1) poor work performance, including a May 18, 1999 incident in which he allegedly damaged an ingot, (2) the manner in which he responded to the investigation of that incident, (3) distributing the newsletter, and (4) encouraging fellow employees to call him during work hours. See id., slip op. at 5-6, J.A. 359-60.

Smallwood published the final edition of the newsletter at about the same time when he received the May 25 warning. On May 26, employee relations supervisor Alan Gines and another supervisor, Max Frederick, met Smallwood when he arrived at work and brought him to the office of melt division supervisor Vinoo Kamdar. There, Gines informed Smallwood that he was suspended pending termination. By letter dated June 8, 1999, TIMET converted Smallwood's suspension to a discharge effective May 26, 1999. Id., slip op. at 6-7, J.A. 360-61.

Pursuant to the procedures in the collective bargaining agreement between TIMET and the Union, Smallwood's discharge was the subject of a grievance that reached step three on July 22, 1999. Id., slip op. at 7, J.A. 361. Following their deliberations over Smallwood's grievance, TIMET and the Union finally resolved the matter in a "Letter of Understanding" dated February 15, 2000. The grievance settlement provided, as follows:

Mr. Smallwood was not discharged for engaging in protected concerted activities under the NLRA. The Company recognizes the Union's rights to communicate with represented employees, to post notices and other related Union materials on plant bulletin boards as outlined in the collective bargaining agreement, and to engage in all other legally protected rights and activities, including, but not necessarily limited to, the NLRA.... The Company's reasons for discharging Mr. Smallwood included issues such as insubordination, inappropriate conduct toward the Company and supervisory employees, ongoing and costly workmanship related infractions, providing misleading and inaccurate information related to melting incident investigations, etc.

Letter of Understanding of 2/15/00, J.A. 349. On March 8, 2000, the Union sent Smallwood a letter advising him that a "decision has been made that no further action will be taken, pertaining to the grievance, filed on your behalf regarding your discharge from employment at Titanium Metals Corporation." Letter from Jerry Storms to David Smallwood of 3/8/00, J.A. 350. Although Smallwood did not have a copy of ...

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