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United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO v. National Labor Relations Board

September 15, 2008

UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL-CIO, PETITIONER,
v.
NATIONAL LABOR RELATIONS BOARD, RESPONDENT.



Petition for Review of an Order of the National Labor Relations Board. No. 26-CA-20861.

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

ARGUED MAY 30, 2008

Before BAUER, RIPPLE and WOOD, Circuit Judges.

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO ("Union") filed a charge with the National Labor Relations Board ("NLRB" or "Board") in which it alleged that Jones Plastic and Engineering Company ("Jones Plastic") had violated sections 8(a)(1) and (3) of the National Labor Relations Act ("NLRA" or "Act"). The Union claimed that Jones Plastic had violated the NLRA by refusing to reinstate economic strikers following the Union's unconditional offer to return to work because all of Jones Plastic's previously hired strike replacements were temporary employees. In its answer, Jones Plastic claimed that all of the strike replacements were permanent employees. The NLRB ruled in favor of Jones Plastic, overruling in part its prior decision in Target Rock Corp., 324 NLRB 373 (1997), enf'd, 172 F.3d 921 (D.C. Cir. 1998), and it dismissed the Union's complaint. The Union now petitions for review of the Board's decision.

For the reasons set forth in this opinion, we deny the Union's petition for review.

I. BACKGROUND

A. Facts

In April 2001, the Union was certified as the representative of a unit of employees at Jones Plastic's plant in Camden, Tennessee. After protracted negotiations for an initial collective bargaining agreement, 53 of the 75 employees in the collective bargaining unit began an economic strike on March 20, 2002.

In late March 2002, Jones Plastic began hiring replacement employees for the workers on strike. It hired a total of 86 replacements during the strike, and each replacement completed Jones Plastic's standard application for employment. Fifty-three replacements were hired in place of a specific striker, and each of these replacements signed a form reciting:

I [name of replacement employee] hereby accept employment with Jones Plastic & Engineering Company, LLC, Camden division (hereafter "Jones Plastic") as a permanent replacement for [name of striker] who is presently on strike against Jones Plastic. I understand that my employment with Jones Plastic may be terminated by myself or by Jones Plastic at any time, with or without cause. I further understand that my employment may be terminated as a result of a strike settlement agreement reached between Jones Plastic and the U.S.W.A. Local Union 224 or by order of the National Labor Relations Board.

Jones Plastic & Eng'g Co. & United Steel Workers, 351 NLRB No. 11, *2 (Sept. 27, 2007). The remaining 33 replacements, who were hired in place of replacements who had quit, executed a form stating that the replacement was a permanent replacement for an unnamed striker.

The record reveals that Sylvia Page, the Human Resources Manager of Jones Plastic, informed one striker replacement that he was a full-time and permanent employee. Another replacement employee was hired in midMay 2002, and he quit his old job to work for Jones Plastic as a replacement employee; this employee believed that he was a permanent employee. A third replacement employee was hired in early June 2002, and Page told her that she was a full-time employee; she believed that she was a permanent employee because she received the same pay and benefits that the striking employees had received.

On July 31, 2002, the Union made, on behalf of the striking employees, an unconditional offer to return to work. That same day, Jones Plastic sent the Union a letter stating that it had a full complement of employees, including permanent replacements. Therefore, the letter stated, the strikers would not be reinstated immediately, but they would be placed on a preferential recall list. Between September 5 and September 19, Jones Plastic offered reinstatement to 47 strikers, of whom 18 accepted.

B. Proceedings Before the NLRB

The Union filed a charge alleging that Jones Plastic had violated sections 8(a)(1) and (3) of the NLRA when it refused to reinstate economic strikers after the Union's unconditional offer to return to work. It maintained that all of Jones Plastic's strike replacements were temporary, not permanent, employees. Jones Plastic defended by asserting that all of the strike replacements were permanent replacements. The NLRB ruled in favor of Jones Plastic and, in the course of its decision, overruled in part its prior decision in Target Rock Corp., 324 NLRB 373 (1997), enf'd, 172 F.3d 921 (D.C. Cir. 1998). Accordingly, it dismissed the Union's complaint.

The majority and dissenting members of the Board agreed about the general principles governing the rights of economic strikers and replacement workers. An economic striker who unconditionally offers to return to work is entitled to reinstatement immediately unless the employer can show a legitimate and substantial business justification for refusing immediate reinstatement. Jones Plastic, 351 NLRB No. 11, at *5, *12 (citing NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378 (1967)). One such business justification is an employer's permanent replacement of economic strikers as a means of continuing its business operations during a strike. Id. (citing Mackay Radio & Tel. Co. v. NLRB, 304 U.S. 333, 345-46 (1938)). Thus, at the conclusion of a strike, an employer is not bound to discharge those hired to fill the places of economic strikers if it made assurances to those replacements that their employment would be permanent; permanence means that they would not be displaced by returning strikers. Id. The business justification defense is an affirmative defense, and the employer has the burden of proving that it hired permanent replacements. Id. To meet its burden, the employer must show a "mutual understanding of permanence" between itself and the replacements. Id.

Despite agreeing on these general principles, the majority and dissent differed on two interrelated issues: first, how an employer may prove that an at-will employee is permanent; and second, how the Board's decision in Target Rock affected the present case. The majority explained that, in its view, the Target Rock majority opinion suggests that [Jones Plastic's] at-will disclaimers informing employees that their employment was for "no definite period" and could be terminated for "any reason" and "at any time, with or without cause" detract from its showing of permanent replacement status. We disagree. That view is based on a misreading of controlling law and is inconsistent with the basic scheme of the Act. We therefore decline to follow it.

Id. at *4. The majority held that the evidence that Jones Plastic had presented was sufficient to establish that the replacement employees were permanent. Specifically, it noted that: the forms that the replacement employees had signed stated that they were permanent replacements for striking employees; Jones Plastic told the striking employees that it had begun to hire permanent replacements; and its human resources manager had told at least one replacement that he was a permanent employee.

The majority also rejected the Union's petition for "a rule requiring employers that seek to hire at-will permanent replacements to explicitly advise employees that they cannot be discharged to make way for returning strikers." Id. at *6 n.9. The majority declined to adopt such a rule and held that Jones Plastic implicitly had advised new employees that they were permanent. In the Board's view, such implicit advice was sufficient:

While [the Union's explicit] language to that effect would support a finding of permanent replacement status, the Board has in the past eschewed a requirement that specific language be used to establish the required mutual understanding of "permanent" employee status. Where, as here, that understanding is established without the use of such language, we will continue to find that strikers have been permanently replaced.

Id. (citation omitted).

The majority also rejected the Union's contention that, "for replacements to be permanent, there must be an enforceable contract between the replacement and the employer." Id.

No requirement of this nature has ever been imposed by any Board or court decision. In Belknap [v. Hale, 463 U.S. 491 (1983)], the Supreme Court did not hold that there must be an enforceable contract to establish permanent replacement status. Instead, the Court held only that the Act did not preclude the enforcement of such a contract if it existed. Moreover, this proposed standard would make the determination of permanent replacement status dependent on whether an enforceable contract was formed under State law. The requirements for formation of such a contract will necessarily vary from one state to another, whereas the Board is charged with fashioning a uni-form national labor policy.

Id.

The dissent, in contrast, believed that the majority had mischaracterized the Target Rock majority opinion:

What then, does Target Rock stand for? It applied existing law concerning the requirement of a mutual understanding of permanent replacement to its particular facts. As for the [Target Rock] majority's statement that the employer's expression of its at-will policy did not support a finding of permanent status, that is a truism. The [Target Rock] majority did not say that at-will employment was incompatible with permanent replacement, nor even that it was evidence against a finding of permanent replacement. The [Target Rock] majority merely stated that an employer's avowal of an at-will policy does not lend support to an affirmative defense of permanent employment. Like the Target Rock majority, we regard that as "obvious."

Prior to Target Rock, the Board had held that at-will employment was not incompatible with permanent replacement status. J.M.A. Holdings, [310 NLRB 1349, 1358 (1993)]. In Target Rock, the Board did not overrule J.M.A. Holdings or even mention it. In the final analysis, neither Target Rock nor any other case stands for the proposition that the majority purports to overrule. In our view, the majority's strained effort to overrule a nonexistent holding can be explained only by its desire to reverse precedent.

Although we disagree with the majority's determination in the present case that the replacements were permanent, that disagreement has nothing to do with Target Rock, properly understood. Rather, it turns on the facts of the case: [Jones Plastic] has simply failed to establish ...


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