Exxon Chemical Co. v. National Labor Relations Board

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 16, 2004 Decided October 26, 2004

No. 03-1343

EXXON CHEMICAL COMPANY,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with

No. 03-1413

On Petition for Review and Cross–Application

for Enforcement of an Order of the

National Labor Relations Board

Tony P. Rosenstein argued the cause for petitioner. With

him on the briefs were Kathryn S. Vaughn and Joe Robert

Caldwell, Jr.

Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

2

Richard A. Cohen, Senior Attorney, National Labor Rela-

tions Board, argued the cause for respondent. With him on

the brief were Arthur F. Rosenfeld, General Counsel, John

H. Ferguson, Associate General Counsel, Aileen A. Arm-

strong, Deputy Associate General Counsel, and Howard E.

Perlstein, Deputy Assistant General Counsel.

Before: GINSBURG, Chief Judge, and EDWARDS and ROGERS,

Circuit Judges.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: After Exxon Chemical Company

ceased operating its Bayway Chemical Plant in Linden, New

Jersey because it formed a joint venture, the union represent-

ing certain Bayway employees filed three grievances alleging

that Exxon had violated the parties’ collective bargaining

agreement (‘‘CBA’’). Exxon refused to arbitrate the griev-

ances. The National Labor Relations Board ruled that the

company had violated section 8(a)(1) and (5) of the National

Labor Relations Act (‘‘the Act’’), 29 U.S.C. § 158(a)(1), (5).

Relying on Velan Valve Corp., 316 N.L.R.B. 1273 (1995),

Exxon petitions for review on the principal ground that its

refusal to arbitrate was not an unfair labor practice as a

matter of law. We deny the petition for review and grant the

Board’s cross-application for enforcement of its Order.

I.

For over thirty years, the International Brotherhood of

Teamsters, Local 887 (‘‘the Union’’) represented the operat-

ing, mechanical, and maintenance employees at Exxon’s Bay-

way Chemical Plant. Exxon’s most recent CBA with the

Union took effect on March 2, 1996, and was scheduled to

expire on June 1, 1999, although it effectively terminated on

December 31, 1998, due to the formation of a joint venture

between Exxon and Shell Chemical Company. The formal

grievance/arbitration procedures outlined in Articles 20 and

21 of the CBA defined ‘‘grievance’’ as ‘‘a claim by an employ-

ee or the Union that the Company has violated an express

provision of this Agreement.’’ These provisions also provided

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that ‘‘[a]lthough the Company hears a claim as a grievance, it

does not waive its right to take the position that the claim is

not a grievance.’’ The CBA also set time limits for the Union

to act or otherwise forfeit its right to arbitrate a grievance.

It further provided that ‘‘[w]hen an employee is to be laid off

TTT [he/she] will receive six (6) months notice’’ and a sever-

ance allowance. Finally, the CBA stated, in Article 5, that

‘‘[t]his Agreement does not affect the [Company’s] Benefit

Program[, including its] Thrift Plan TTT or the administration

thereof. This provision, however, is not a waiver of such

rights as the Union has to bargain concerning these pro-

grams.’’

In July 1996, Exxon announced to its employees that it was

forming a joint venture, Infineum, to which it intended to sell

its Bayway operation. On October 31, 1996, Exxon notified

the Union that all Bayway employees it represented would be

laid off when the joint venture became operational. Exxon

provided updates about the impending layoffs over the next

two years.

During that two-year period, Exxon and the Union engaged

in ‘‘effects’’ bargaining regarding the joint venture. The

parties principally discussed whether Infineum was bound by

the CBA and the extent to which it would hire the current

workforce, as well as the related issues of whether and when

Exxon would have to escrow or sequester monies to cover

severance payments. The information that the Union re-

ceived during these sessions about Infineum’s formation

caused it to file numerous grievances and unfair labor prac-

tice charges, including alleging that Exxon had improperly

denied severance pay and retirement benefits to employees

after its notice of layoff. The ‘‘effects’’ bargaining resulted in

an agreement on November 24, 1998 (‘‘November Agree-

ment’’). The Union agreed to withdraw its pending griev-

ances and unfair labor practice charges ‘‘relating to the

formation of Infineum’’ and ‘‘not to initiate or reinstitute

these or substantially similar claims against Exxon in any

forum whatsoever.’’ Exxon, in turn, provided job assurances

for nine unit employees and agreed to pay all employees until

December 31, 1998. The agreement also stated that the

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Union and Infineum would begin meeting with the aim of

reaching a collective bargaining agreement by December 31,

1998, a task they accomplished on December 20, 1998.

On December 31, 1998, the last day Exxon operated its

Bayway plant, Exxon laid off all unit employees and gave

them their final paychecks, including severance pay. Exxon,

however, did not provide a 6% matching contribution to the

Thrift Fund for the severance pay as it did for regular pay,

and it also decided to transfer the Thrift Fund to Infineum.

On January 29, 1999, the Union orally notified Exxon of three

grievances to be filed; written notification followed the next

day. The grievances complained that Exxon (1) failed to

provide the contractually-required six months’ notice before

layoff, (2) failed to match the employees’ thrift contributions

from severance payments, and (3) unilaterally decided to

transfer the employees’ thrift accounts to the Infineum sav-

ings plan. Exxon did not respond initially in writing to the

grievances.

In a March 26, 1999, letter to William Goodhart, an Exxon

labor relations coordinator, Union trustee Al DeFreece for-

mally requested arbitration on behalf of the Union. Exxon

responded by letter of April 29, 1999, with Goodhart rejecting

the request for arbitration on the grounds that the grievances

were untimely, the November Agreement precluded the no-

tice grievance, and the grievances relating to the thrift ac-

counts were either raised or should have been raised during

‘‘effects’’ bargaining. DeFreece responded by letter of May

12, 1999, requesting arbitration and that Exxon make ar-

rangements to select arbitrators. Upon receiving no re-

sponse from Exxon, the Union’s attorney attempted to obtain

a designation by the American Arbitration Association

(‘‘AAA’’). Goodhart responded by letter of July 2, 1999, that

the grievances were not arbitrable, and Exxon’s attorney

reiterated this position by letters of July 6, July 26, and

August 10, 1999, in response to the Union’s continued attempt

to pursue arbitration through the AAA. When the AAA

declined to proceed with arbitration, the Union filed an unfair

labor practice charge on September 1, 1999, alleging that

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Exxon refused to abide by the CBA’s grievance/arbitration

process to resolve the grievances.

After an evidentiary hearing, an Administrative Law Judge

(‘‘ALJ’’) found that the charge was timely because the Union

did not have ‘‘clear and unequivocal notice of a violation of the

Act’’ prior to March 1, 1999 (six months before the charge

was filed on September 1), and that the ‘‘grievances are

clearly covered by the grievance-arbitration provisions under

the collective bargaining agreement.’’ The Board agreed the

charge was timely and, over Chairman Battista’s dissent, also

agreed that by refusing to select an arbitrator and to arbi-

trate the grievances, Exxon unilaterally abandoned or repudi-

ated the grievance/arbitration procedure in violation of sec-

tion 8(a)(1) and (5). The Board ordered Exxon to, among

other things, submit the three grievances to arbitration and

participate in the selection of an arbitrator. Exxon now

petitions for review and the Board has filed a cross-

application for enforcement of its Order.

II.

Under section 8(a)(5) of the Act, it is an unfair labor

practice for an employer to refuse to bargain with its employ-

ees’ chosen representative, 29 U.S.C. § 158(a)(5), and an

employer who violates section 8(a)(5) also, derivatively, vio-

lates section 8(a)(1). See NLRB v. Centra, Inc., 954 F.2d 366,

367 n.1 (6th Cir. 1992); NLRB v. Newark Morning Ledger

Co., 120 F.2d 262, 265 & n.1 (3d Cir. 1941); cf. Metro Edison

Co. v. NLRB, 460 U.S. 693, 698 n.4 (1988). The court will

uphold the Board’s decision whether to assert jurisdiction

over an employer’s refusal to arbitrate so long as it is rational

and consistent with the Act, and the Board’s reasoning is

adequate, rational, and not arbitrary. DaimlerChrysler Corp.

v. NLRB, 288 F.3d 434, 444–45 (D.C. Cir. 2002); see also

Carey v. Westinghouse Elec. Corp., 375 U.S. 261, 271 (1964).

While the Board’s interpretation of the scope of the parties’

contractual agreement is subject to de novo review, Litton

Fin. Printing Div. v. NLRB, 501 U.S. 190, 202–03 (1991), its

findings of fact are conclusive if supported by substantial

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evidence in the record as a whole, Perdue Farms, Inc. v.

NLRB, 144 F.3d 830, 834–35 (D.C. Cir. 1998); see also

Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951).

The court will overturn the Board’s adoption of the ALJ’s

credibility determinations only if they ‘‘are ‘hopelessly incred-

ible,’ ‘self contradictory,’ or ‘patently unsupportable.’ ’’ Cad-

bury Beverages, Inc. v NLRB, 160 F.3d 24, 28 (D.C. Cir.

1998) (quoting Capital Cleaning Contractors, Inc. v. NLRB,

147 F.3d 999, 1004 (D.C. Cir. 1998)).

We address at the outset Exxon’s contention that the unfair

labor practice charge was barred by the six-month limitations

period in section 10(b) of the Act, 29 U.S.C. § 160(b). The

statute begins to run when the unfair labor practice occurs.

Leach v. NLRB, 54 F.3d 802, 806–07 (D.C. Cir. 1995); Team-

sters Local Union No. 42 v. NLRB, 825 F.2d 608, 614–16 (1st

Cir. 1987); NLRB v. Al Bryant, Inc., 711 F.2d 543, 547 (3rd

Cir. 1983). Here, the unfair labor practice is Exxon’s refusal

to arbitrate. As the record makes clear, the Union did not

request, and the employer therefore could not have refused,

arbitration until March 26, 1999, which was less than six

months before the Union filed the charge. Therefore, the

unfair labor practice charge is timely.

As to the merits of the unfair labor practice, Exxon first

contends that the Board erred as a matter of law in focusing

on whether the three grievances were potentially covered by

the CBA, when the question is whether the employer engaged

in a wholesale repudiation of the contract. In its view, the

three grievances represented, ‘‘at most,’’ Petitioner’s Br. at

12, a ‘‘narrow class’’ under Velan Valve.

The Board has long had a policy of deferring its unfair

labor practice jurisdiction prospectively to an agreed upon

arbitration procedure, where, for example, the dispute turns

on an application of a CBA’s terms. See Hammontree v.

NLRB, 925 F.2d 1486, 1490–91 (D.C. Cir. 1991) (en banc)

(citing Collyer Insulated Wire, 192 N.L.R.B. 837, 842 (1971));

cf. Util. Workers Union v. NLRB, 39 F.3d 1210, 1213 (D.C.

Cir. 1994) (citing Spielberg Mfg. Co., 112 N.L.R.B. 1080

(1955)). Velan Valve is an example of when the Board will

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conclude that the interests favoring collective bargaining as

an essentially private process are best served by the Board’s

nonintervention, leaving the aggrieved party to seek specific

performance of the duty to arbitrate through the courts

under section 301 of the Labor Management Relations Act, 29

U.S.C. § 185. In that case, the Board found no section

8(a)(5) violation where an employer had a good faith belief

that a single grievance was not timely under a five-day

limitations period in the parties’ CBA. Velan Valve, 316

N.L.R.B. at 1273–74. The union had filed a subcontracting

grievance more than thirty days after the employer had

advised it about the subcontracting of janitorial work. Id. at

1273. The employer, though citing its long standing policy

and intent to resolve grievances by arbitration, declined to do

so in this instance because the subcontracting grievance was

untimely under the parties’ agreement and, in any event,

lacked merit. Id. The Board, with one member dissenting,

concluded that under these circumstances the employer’s

‘‘refusal involves precisely that type of narrow, fact-bound,

contractual dispute that more properly should be handled by

the parties through the contract-dispute mechanism, and not

by recourse to the Board.’’ Id. at 1274. The employer had

not announced a broad policy of refusing to arbitrate griev-

ances generally, had participated at each step of the griev-

ance proceeding, and had reassured the union that it re-

mained committed to processing grievances under the parties’

contract, including arbitration. Id.

Exxon would have the Velan Valve analysis apply on the

grounds that the three grievances were simultaneously filed

and are a ‘‘narrow class’’ relating to the transition of employ-

ees to Infineum. However, in its Decision, the Board ade-

quately distinguished Velan Valve:

[T]he Board [in Velan Valve] emphasized that the

employer, at the time of its refusal to arbitrate

grievances, reassured the union of its commitment to

the collective-bargaining agreement and to good-

faith dealing with the union. [Exxon] here provided

no such assurances. Rather, it repeatedly ignored

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the Union’s request to respond to the Union’s arbi-

tration requests.

Exxon Chemical Co., 340 N.L.R.B. No. 51, at 3 (Sept. 29,

2003).

The Board noted that the three grievances, unlike the

single grievance in Velan Valve, ‘‘implicated a range of con-

tractual issues, [are] not a narrow class of issues, and consti-

tuted the totality of collective-bargaining issues pending be-

tween the parties.’’ Id. While Exxon adopts the position of

the dissenting member that there was only a breach of

contract claim remediable under section 301, that conduct

may constitute a breach remediable in the courts does not

mean that the Board may not proscribe it as an unfair labor

practice. NLRB v. Strong Roofing & Insulating Co., 393

U.S. 357, 361 (1969). The Board quite reasonably found it

significant that the parties were in an end-game situation.

Exxon had sold the facility, ended its relationship with unit

employees, and walked away from what was left of the CBA

during a time when unit employees and the Union were most

vulnerable. Cf. Fall River Dyeing & Finishing Corp. v.

NLRB, 482 U.S. 27, 39–40 (1987).

Second, Exxon contends that ‘‘good faith,’’ not arbitrability,

is the relevant issue. Although good faith may be a relevant

consideration, the standard for determining whether a partic-

ular refusal to arbitrate violates section 8(a)(5) remains

whether the employer’s conduct is ‘‘tantamount to a wholesale

repudiation,’’ Velan Valve, 316 N.L.R.B. at 1274, or consti-

tutes a ‘‘unilateral modification’’ of the collective bargaining

agreement ‘‘by imposing a noncontractual condition that [the

employer] would arbitrate only those grievances that it decid-

ed should go to arbitration.’’ 3 State Contractors, Inc., 306

N.L.R.B. 711, 715 (1992). This is the standard that the Board

applied. Exxon’s contention that it was misled by Velan

Valve as to the standards for Board intervention for refusals

to arbitrate is unpersuasive because, as the Board discussed,

Exxon’s refusal to arbitrate three grievances on a variety of

grounds in an end-game situation is quite different than the

employer’s decision in Velan Valve not to arbitrate a single

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grievance on a single procedural ground. Amalgamated

Clothing Workers v. NLRB, 343 F.2d 329 (D.C. Cir. 1965),

cited by Exxon, did not involve an abandonment of the

arbitration provisions of the CBA, but instead the employer,

based on erroneous legal advice, refused to arbitrate a single

grievance unless the union dropped parallel unfair labor

practice charges. Exxon’s reliance on Microimage Display v.

NLRB, 924 F.2d 245 (D.C. Cir. 1991), is equally unavailing

because the Board found that the employer never refused to

arbitrate the particular grievance. See id. at 250.

Third, Exxon contends that the disputed grievances were

not arbitrable under the CBA. Although Exxon correctly

states that ‘‘a party cannot be forced to arbitrate the arbitra-

bility question,’’ Litton Fin., 503 U.S. at 208–09, courts con-

strue arbitration clauses broadly, resolving doubts in favor of

coverage. United Steelworkers v. Warrior & Gulf Naviga-

tion Co., 363 U.S. 574, 582–83 (1960). Exxon invokes Article

5 of the CBA and the waiver of claims provision in the

November Agreement to maintain that the grievances were

not substantively arbitrable. Neither provision, however, is a

clear statement excluding any of the subjects raised by the

three grievances from arbitration, see AT&T Technologies,

Inc. v. Communications Workers, 475 U.S. 643, 650 (1986),

and Exxon presented no evidence that the language in Article

5 was intended to give it the unfettered right to convert

employee accounts to a different company without bargaining.

Moreover, ‘‘[o]nce it is determined TTT that the parties are

obligated to submit the subject matter of a dispute to arbitra-

tion, ‘procedural’ questions that grow out of the dispute and

bear on its final disposition should be left to the arbitrator.’’

John Wiley & Sons v. Livingston, 376 U.S. 543, 557 (1964);

see also Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,

84 (2002). Therefore, as the Board ruled, Exxon’s objections

that the three grievances were untimely under the contract,

and its claims of waiver and estoppel based on the November

Agreement, are properly for the arbitrator to revolve. Exx-

on’s assertion that the grievances concerned matters that on

their face are of no consequence, and therefore were brought

10

in bad faith, requires no response. See AT&T Technologies,

475 U.S. at 649–50.

Finally, Exxon contends that it did not receive a fair

hearing for two reasons, neither of which has merit. To the

extent Exxon claims the ALJ excluded evidence of its good

faith, Exxon has not met its burden of demonstrating preju-

dice, see Desert Hospital v. NLRB, 91 F.3d 187, 190 (D.C.

Cir. 1996). The ALJ made clear at the hearing that he would

rule based solely upon the parties’ written correspondence

after the grievances were filed. In limiting the period during

which Exxon’s good faith was relevant, the ALJ reasonably

exercised his discretion to exclude Exxon’s evidence that

related to its claims of waiver and estoppel, which, as dis-

cussed, are for the arbitrator to resolve. See Food Stores

Employees Union, Local 347 v. NLRB, 422 F.2d 685, 692

(D.C. Cir. 1969). Exxon’s other objection, that the ALJ

prohibited it from adequately testing DeFreece’s credibility,

is belied by the record, for the ALJ allowed Exxon to test

DeFreece’s credibility on the only issue as to which it was

relevant, the section 10(b) claim.

Accordingly, we deny the petition for review and grant the

Board’s cross-application for enforcement of its Order.