United Steel Paper v. NLRB

In the

United States Court of Appeals

For the Seventh Circuit

No. 07-3885

U NITED STEEL, P APER AND F ORESTRY,

R UBBER, M ANUFACTURING, E NERGY,

A LLIED INDUSTRIAL AND SERVICE

W ORKERS INTERNATIONAL U NION,

AFL-CIO,

Petitioner,

v.

N ATIONAL L ABOR R ELATIONS B OARD ,

Respondent.

Petition for Review of an Order of the

National Labor Relations Board.

No. 26-CA-20861

A RGUED M AY 30, 2008—D ECIDED S EPTEMBER 15, 2008

Before B AUER, R IPPLE and W OOD , Circuit Judges.

R IPPLE, Circuit Judge. United Steel, Paper and Forestry,

Rubber, Manufacturing, Energy, Allied Industrial and

Service Workers International Union, AFL-CIO (“Union”)

2 No. 07-3885

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 previ-

ously hired strike replacements were temporary employ-

ees. 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 representa-

tive 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.

No. 07-3885 3

In late March 2002, Jones Plastic began hiring replace-

ment employees for the workers on strike. It hired a

total of 86 replacements during the strike, and each re-

placement 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 Com-

pany, 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 perma-

nent replacement for an unnamed striker.

The record reveals that Sylvia Page, the Human Re-

sources Manager of Jones Plastic, informed one striker

replacement that he was a full-time and permanent em-

ployee. Another replacement employee was hired in mid-

May 2002, and he quit his old job to work for Jones Plastic

as a replacement employee; this employee believed that

4 No. 07-3885

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, includ-

ing 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 perma-

nent 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 dis-

missed the Union’s complaint.

No. 07-3885 5

The majority and dissenting members of the Board

agreed about the general principles governing the rights

of economic strikers and replacement workers. An eco-

nomic striker who unconditionally offers to return to work

is entitled to reinstatement immediately unless the em-

ployer 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 replace-

ment 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 affirma-

tive 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 em-

ployee 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

6 No. 07-3885

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 replace-

ments; 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 require-

ment that specific language be used to establish the

required mutual understanding of “permanent”

employee status. Where, as here, that understanding

No. 07-3885 7

is established without the use of such language, we

will continue to find that strikers have been perma-

nently 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 enforce-

ment 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 partic-

ular facts. As for the [Target Rock] majority’s state-

8 No. 07-3885

ment 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 perma-

nent 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 “obvi-

ous.”

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 determina-

tion 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 the existence of the requisite mutual

understanding of permanent status.

Jones Plastic, 351 NLRB No. 11, at *9-10 (Liebman & Walsh,

Members, dissenting) (footnotes omitted).

No. 07-3885 9

With respect to the evidence in the case before it, the

dissenting members believed that there was no mutual

understanding of permanence between Jones Plastic and

the replacement employees. The dissenting members

explained:

The replacements here were required to sign a

statement stating that they were “permanent

replacement[s],” but that they could be “terminated . . .

at any time, with or without cause.” The statement

then stated, “I further understand that my employment

may be terminated as a result of a strike settlement

agreement . . . or by order [of] the National Labor

Relations Board.”

Had [Jones Plastic] made only the latter statement, a

finding that the replacements were permanent would

follow. But [Jones Plastic] did not so limit itself. Rather,

it told the employees not only that they could be

displaced as a result of a strike settlement or Board

order, but, additionally, that they could be discharged

at any time for any reason. Taken together—and absent

any other evidence of mutual understanding of perma-

nence—[Jones Plastic’s] statements did not reflect any

commitment by [Jones Plastic] to the replacements.

Certainly, the statements did not reflect a commitment

that [Jones Plastic] would refuse, in the absence of a

strike settlement, to reinstate strikers if it meant

terminating replacements. Although [Jones Plastic]

used the term “permanent replacement,” it then

undercut that statement by failing to give the replace-

ments any assurance that they had rights vis-à-vis the

10 No. 07-3885

strikers. In the words of Belknap [v. Hale, 463 U.S. 491

(1983)], [Jones Plastic]’s statements, like those of the

employer in Covington Furniture [Manufacturing Corp.,

212 NLRB 214 (1974)], created a situation in which “the

replacement could be fired at the will of the employer

for any reason; the employer would violate no promise

made to a replacement if it discharged some of them to

make way for returning strikers.” Or, in the simpler

formulation of the Board, [Jones Plastic], by its state-

ments, “kept [all] its options open.” Target Rock, supra

at 375. As a result, the evidence fails to support a

finding that [Jones Plastic] and the replacements

shared an understanding that the replacements were

permanent.

Id. at *10 (penultimate alteration in original).

II

DISCUSSION

A. Standard of Review

We review decisions of the NLRB deferentially. Multi-Ad

Servs., Inc. v. NLRB, 255 F.3d 363, 370-71 (7th Cir. 2001). The

Board’s legal conclusions shall be upheld if they are not

“irrational or inconsistent with the Act.” NLRB v. Fin. Inst.

Employees, 475 U.S. 192, 202 (1986); NLRB v. Town &

Country Elec., Inc., 516 U.S. 85, 89-90 (1995); Gen. Serv.

Employees Union v. NLRB, 230 F.3d 909, 912 (7th Cir. 2000).

The Board’s findings of fact will be reversed only if they

are not supported by substantial evidence on the record

taken as a whole, Universal Camera Corp. v. NLRB, 340 U.S.

No. 07-3885 11

474, 488 (1951); substantial evidence is “such relevant

evidence as a reasonable mind might accept as adequate

to support the Board’s conclusion,” Brandeis Mach. &

Supply Co. v. NLRB, 412 F.3d 822, 829 (7th Cir. 2005)

(explaining that the Board’s inferences and the con-

clusions that it draws from the facts also are entitled to

deference). We have cautioned, nevertheless, that our

deferential standard of review is not akin to the proverbial

rubber stamp: “We must ‘examine all of the evidence in

context to ensure the Board’s findings fairly and accurately

represent the picture painted by the record.’ ” Brandeis

Mach. & Supply Co., 412 F.3d at 829 (quoting NLRB v.

Clinton Elecs. Corp., 284 F.3d 731, 737 (7th Cir. 2002)).

The determination whether Jones Plastic had a “mutual

understanding of permanence” between itself and the

replacements is a question of fact, and therefore it is an

issue that we review under the substantial evidence

standard. See NLRB v. Augusta Bakery Corp., 957 F.2d 1467,

1473 (7th Cir. 1992).

B. The Reinstatement Rights of Economic Strikers

The Union and its amicus, the AFL-CIO, contend that the

Board’s decision is contrary to Belknap, Inc. v. Hale, 463

U.S. 491 (1983). In support of this argument, the Union

points to the following language from Belknap:

An employment contract with a replacement promis-

ing permanent employment, subject only to settlement

with its employees’ union and to a Board unfair

labor practice order directing reinstatement of strikers,

12 No. 07-3885

would not in itself render the replacement a

temporary employee subject to displacement by a

striker over the employer’s objection during or at the

end of what is proved to be a purely economic strike.

Id. at 503 (emphasis added). According to the Union,

Belknap requires that, in order to hire a permanent replace-

ment, the employer must give the replacement an “en-

forceable promise” of permanence, i.e., a binding contract,

by reference to state law, not to discharge the replace-

ment in favor of a returning striker. In the Union’s view,

the NLRB’s decision here is problematic because it

permits an employer to manipulate the reinstatement

procedure by discharging ostensibly permanent replace-

ments to permit the recall of favored strikers. Because the

employer would determine the basis for reinstatement

in such a selective recall, continues the Union, the com-

pany’s reason may be lack of union fervor. The Union also

contends that Jones Plastic’s offer of permanent employ-

ment was illusory because it allowed Jones Plastic to keep

all of its options open. In the Union’s view, at-will employ-

ment and an employer’s right to hire permanent striker

replacements may be harmonized only by requiring

employers that seek to hire at-will, permanent replace-

ments to advise employees explicitly that they cannot be

discharged to make way for returning strikers but are

otherwise at-will employees.1

1

The Union suggests the following language: “I understand

that my employment with [the employer] may be terminated by

(continued...)

No. 07-3885 13

The General Counsel submits that an employer may

employ a permanent employee to replace a striker, while,

at the same time, hiring that replacement employee on

an at-will basis. The General Counsel believes that

Belknap does not require an employer to give a replace-

ment a legally enforceable agreement under state law in

order to make him permanent. In his view, Belknap was

limited to the issue of whether state causes of action were

preempted by the Wagner Act; he emphasizes that there

was no “at-will” disclaimer at issue in the case. The

General Counsel also asserts that the Union’s pro-

posal—that the employer be required to state specifically

that a replacement is employed at-will and may be termi-

nated for any reason provided that the termination is not

to make room for a returning striker—is too complicated

to be workable.

After reviewing the applicable legal standards, we

shall examine each of the Union’s arguments in turn.

1.

Economic strikers retain their status as employees

under section 2(3) of the NLRA, and they are entitled to

1

(...continued)

myself or [the employer], at any time, with or without cause, for

any reason other than to permit the return of a striker unless

the return of such striker is required by a strike settlement

agreement reached between [the employer] and [the union] or

by order of the [NLRB].” Reply Br. at 16-17.

14 No. 07-3885

reinstatement at the conclusion of the strike. 29 U.S.C.

§ 152(3).2 An employer who refuses to reinstate an eco-

nomic striker upon his unconditional return to work

therefore violates section 8(a)(1) and (3) of the Act, 29

U.S.C. §§ 158(1) & (3), unless the employer can demon-

strate a “legitimate and substantial business justification

for its failure to reinstate the employee.” NLRB v. Great

Dane Trailers, 388 U.S. 26, 34 (1967).

One legitimate and substantial business justification

under which an employer may refuse to reinstate

economic strikers is that it hired permanent replace-

ments to replace the striking employees. NLRB v. Mackay

Radio & Tel. Co., 304 U.S. 333, 345-46 (1938); NLRB v. Mars

Sales & Equip. Co., 626 F.2d 567, 572 (7th Cir. 1980). Since

the early days of the Act, the Supreme Court has recog-

nized that, during an economic strike, an employer has a

“right to protect and continue his business” and that an

employer does not commit an unfair labor practice by

making “assurance[s] . . . to those who accepted employ-

ment during the strike that if they so desired their places

might be permanent.” Mackay Radio, 304 U.S. at 345-46. We

have explained that “[t]he rationale for this exception to

the general rule is that the employer’s interest in con-

tinuing his business during a strike and the needed

2

Section 152(3) states: “The term ‘employee’ shall include . . .

any individual whose work has ceased as a consequence of, or

in connection with, any current labor dispute or because of any

unfair labor practice, and who has not obtained any other

regular and substantially equivalent employment . . . .” See

also NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378 (1967).

No. 07-3885 15

inducement of permanent employment to obtain replace-

ments is a sufficient business justification overcoming

protection for economic strikers.” Mars Sales, 626 F.2d at

573. In accordance with these principles, when an em-

ployer, in the course of an economic strike, has hired

permanent employees to replace striking employees, the

employer is not required to discharge the replacement

employees at the end of the strike to make way for the

formerly striking employees. Fleetwood Trailer Co., 389

U.S. at 378. Instead, the employer may postpone rein-

statement of these employees until positions become

available for which they are qualified. Mackay Radio, 304

U.S. at 345-46.

The burden of proving that a replacement employee

is permanent rather than temporary is on the employer.

Fleetwood Trailer Co., 389 U.S. at 378; Great Dane Trailers, 388

U.S. at 34-35. To discharge this burden, the employer must

establish that it had a “mutual understanding” of perma-

nence with the replacement employees. In re Consol.

Delivery & Logistics, Inc., 337 NLRB 524, 526 (2002), enf’d,

63 Fed. App’x 520 (D.C. Cir. 2003); Augusta Bakery Corp.,

957 F.2d at 1473. The key inquiry of the mutual under-

standing test is whether the employer and the replace-

ment employees “intended that the workers’ employment

not terminate at the conclusion of the strike.” Solar Tur-

bines, Inc., 302 NLRB 14, 15-16 (1991), aff’d, Int’l Ass’n of

Machinists & Aerospace Workers v. NRLB, 8 F.3d 27 (9th Cir.

1993) (unpublished). An employer, therefore, “must

show that the men who replaced the strikers were re-

garded by themselves and the [employer] as having

received their jobs on a permanent basis.” Ga. Highway

16 No. 07-3885

Express, 165 NLRB 514, 516 (1967). The Board has ex-

plained that, “[a]bsent evidence of a mutual understand-

ing, [an employer]’s own intent to employ the replace-

ments permanently is insufficient.” Consol. Delivery &

Logistics, Inc., 337 NLRB at 526.

In making this determination, the Board consistently

has considered all of the relevant circumstances. Kansas

Milling Co., 97 NLRB 219, 221 (1951) (examining the “entire

record”). The Board, for example, has examined the em-

ployer’s written and oral communications to the replace-

ment employees as well as the context in which the com-

munications occurred, see, e.g., Hansen Bros. Enters., 279

NLRB 741, 741-42 (1986); Augusta Bakery Corp., 957 F.2d

at 1473, whether the replaced employees were trans-

ferees from other plants operated by the employer, see,

e.g., Ga. Highway Express, 165 NLRB at 516-17, and whether

the replacements considered themselves permanent

employees or feared being replaced at the end of the

strike, see, e.g., Target Rock Corp., 324 NLRB 373, 374-75

(1997). Given this totality-of-the-circumstances approach,

the Board has found that employees who are hired on a

probationary basis or who are subject to further applica-

tion procedures, physical examinations or drug testing

are permanent employees for economic striker-replace-

ment purposes so long as there is a mutual under-

standing that the resolution of the strike will not affect

whether the employee is retained.3

3

See Solar Turbines, Inc., 302 NLRB 14, 15-16 (1991), aff’d, Int’l

Ass’n of Machinists & Aerospace Workers v. NRLB, 8 F.3d 27 (9th

(continued...)

No. 07-3885 17

Consistent with these principles, the Board has held that

an employee is not permanent where the employee’s job

depended not only on the employee’s performance

during the probationary period, but also on “when the

strikers came back to work.” Cyr Bottle Gas Co., 204 NLRB

527, 527 (1973), enf’d, 497 F.2d 900 (6th Cir. 1974); see also

Augusta Bakery Corp., 957 F.2d at 1473 (holding that the

replacements were temporary because, although the

replacements were told that “if they worked out and did

their job, they had a job,” the testimony of the replace-

ments indicated that they did not understand themselves

to be permanent employees). A similar result was reached

in Covington Furniture. There, the Board explained that

3

(...continued)

Cir. 1993) (unpublished) (concluding that, if “the replacement

workers and the [employer] intended that the workers’ employ-

ment not terminate at the conclusion of the strike, the fact that

the replacements had yet to complete these postinterview tests

at the conclusion of the strike did not render them temporary

workers subject to discharge”); see also J.M.A. Holdings, Inc., 310

NLRB 1349, 1349 (1993) (same result under similar circum-

stances, except that the employees were expressly advised that

they were employed on an “at-will” basis); C.H. Guenther & Son,

Inc., 174 NLRB 1202, 1212 (1969), enf’d, 427 F.2d 983, 985-86 (5th

Cir. 1970); Anderson, Clayton & Co., 120 NLRB 1208, 1214 (1958)

(employees subject to a “6-month probationary period for all

new employees during which [the employer] was free to

discharge, transfer, or otherwise handle an employee without

recourse” nevertheless were permanent employees); Kansas

Milling Co., 97 NLRB 219, 226 (1951) (30-day probationary

period).

18 No. 07-3885

the evidence did not disclose “any promise by [the em-

ployer] to the replacements that they were permanent

replacements.” Covington Furniture Mfg. Corp., 212 NLRB

214, 220 (1974), enf’d, 514 F.2d 995 (6th Cir. 1975) (emphasis

added). Given the absence of evidence of such a promise,

the Board noted that the “implication from the method

of hiring[] and the learning periods needed[] was that the

jobs might well be temporary.” Id. Finally, in Target Rock,

the case that the Board here overruled in part, the em-

ployer had placed a recruiting advertisement stating that

“all positions could lead to permanent full-time after the

strike.” 324 NLRB at 373 (second emphasis added). The

record did not establish, the Board explained, that “the

hires had reason to know, either from filling out the

application and notice of employment forms, having to

pass drug and alcohol screening tests, or receiving various

employment benefits, that they were permanent employ-

ees.” Id. Indeed, at one point during negotiations with

the union, the employer referred to the replacements as

“not permanent.” Id. at 374. The Board noted that the

“at-will” disclaimer used by the employer “obviously [did]

not support the [employer’s] position that the striker re-

placements were permanent.” Id. (citation omitted).

Although the replacement employees had been told

periodically that they were “permanent at-will employees,”

these assurances alone did not establish that the em-

ployer had a mutual understanding with the replace-

ments that the resolution of the strike would not affect

the replacements’ employment status. Id.

The results reached in these cases support comfortably

the Board’s rationale for allowing an employer to refuse

No. 07-3885 19

to discharge permanent replacements in favor of striking

employees. An employer has a right to continue to

operate his business during an economic strike. See Mackay

Radio, 304 U.S. at 345. To recruit replacement personnel

during such a strike, an employer may need to assure

those replacements that their positions do not depend

wholly upon the resolution of the strike.4 Mars Sales, 626

F.2d at 573. Thus, an employer has a “legitimate and

substantial business justification” for refusing to dis-

charge replacement employees with whom the em-

ployer established a mutual understanding of perma-

nence with respect to returning strikers. Fleetwood Trailer

Co., 389 U.S. at 378. As long as this mutual understanding

is established through an examination of the totality of

the circumstances, an employer may impose other condi-

tions of employment such as probationary periods,

further testing and at-will employment—conditions to

which the replacements would have been subjected even

in the absence of a possibility that returning economic

strikers might seek reinstatement in the jobs for which

the replacements are being hired. See Solar Turbines, 302

NLRB at 15-16.

4

We say “wholly” upon the resolution of the strike because, as

we shall explain in the next subsection, the Supreme Court in

Belknap v. Hale, 463 U.S. 491, 503 (1983), permitted an employer

to condition an offer of permanent employment on “settlement

with its employees’ union and [on] a Board unfair labor prac-

tice order directing reinstatement of strikers.”

20 No. 07-3885

2.

We do not believe that the Supreme Court’s decision

in Belknap is controlling. In Belknap, there was an

economic strike, and the company sought to hire perma-

nent replacements. It placed an advertisement seeking

applicants to “permanently replace striking warehouse

and maintenance employees.” 463 U.S. at 494. At all times

during the strike, even after the NLRB regional director

filed a complaint alleging that the employer had com-

mitted an unfair labor practice, the replacements were

assured that they were permanent; no “at-will” disclaimer

was at issue in the case. Subsequently, after negotiating

with the union, the employer agreed to discharge the

permanent replacements in favor of the striking employ-

ees. The permanent striker replacements sued in state court

alleging breach of contract and misrepresentation. The

Supreme Court granted certiorari to decide whether the

NLRA preempted the replacements’ state causes of action.

The Court held that there was no preemption of the

state court actions in question. Federal law permits, but

does not require, an employer to hire replacements

during an economic strike, the Justices explained; if those

replacements are “permanent,” within the meaning of

federal labor law, then the employer need not discharge

them in order to reinstate the strikers. As such, the Court

found preemption untenable:

But when an employer attempts to exercise this

very privilege by promising the replacements that

they will not be discharged to make room for re-

turning strikers, it surely does not follow that the

No. 07-3885 21

employer’s otherwise valid promises of permanent

employment are nullified by federal law and its other-

wise actionable misrepresentations may not be pur-

sued. We find unacceptable the notion that the

federal law on the one hand insists on promises of

permanent employment if the employer anticipates

keeping the replacements in preference to returning

strikers, but on the other hand forecloses damage

suits for the employer’s breach of these very promises.

Even more mystifying is the suggestion that the

federal law shields the employer from damages suits

for misrepresentations that are made during the

process of securing permanent replacements and are

actionable under state law.

Id. at 500 (citations omitted). The Court rejected the em-

ployer’s argument that the prospect of entertaining suits

filed by fired replacement employees would burden the

employer’s right to hire permanent replacements. This

argument, the Court believed, is

no[] more than [an] argument[] that . . . promises of

permanent employment that under federal law the

employer is free to keep, if it so chooses, are essen-

tially meaningless. It is one thing to hold that the

federal law intended to leave the employer and the

union free to use their economic weapons against one

another, but is quite another to hold that either the

employer or the union is also free to injure innocent

third parties without regard to the normal rules of law

governing those relationships. We cannot agree with

the dissent that Congress intended such a lawless

regime.

22 No. 07-3885

The argument that entertaining suits like this will

interfere with the asserted policy of the federal law

favoring settlement of labor disputes fares no better.

This is just another way of asserting that the employer

need not answer for its repeated assurances of perma-

nent employment or for its otherwise actionable

misrepresentations to secure permanent replacements.

We do not think that the normal contractual rights

and other usual legal interests of the replacements

can be so easily disposed of by broad-brush assertions

that no legal rights may accrue to them during a

strike because the federal law has privileged the

“permanent” hiring of replacements and encourages

settlement.

Id.

In a part of Belknap that the Union believes critical to

the present case, the Supreme Court recognized that its

holding—allowing innocent third-parties to sue in state

court for breach of contract or misrepresentation—could

prove costly to employers who hire permanent replace-

ment employees and thereby inhibit settlements between

employers and unions. Id. at 505 & n.9. The Court, accord-

ingly, indicated that employers could “condition” their

offers of “permanent” employment. The Court held that

an employer may hire a permanent replacement but

nevertheless state explicitly that the permanent replace-

ment may lose the job if the employer settles with the

striking employees’ union or if the NLRB issues an unfair

labor practice order directing reinstatement of strikers.

In the words of the Court:

No. 07-3885 23

An employment contract with a replacement promis-

ing permanent employment, subject only to settle-

ment with its employees’ union and to a Board unfair

labor practice order directing reinstatement of

strikers, would not in itself render the replacement a

temporary employee subject to displacement by a

striker over the employer’s objection during or at the

end of what is proved to be a purely economic strike.

The Board suggests that such a conditional offer

“might” render the replacements only temporary hires

that the employer would be required to discharge at

the conclusion of a purely economic strike. But the

permanent-hiring requirement is designed to protect

the strikers, who retain their employee status and are

entitled to reinstatement unless they have been perma-

nently replaced. That protection is unnecessary if the

employer is ordered to reinstate them because of the

commission of unfair labor practices. It is also mean-

ingless if the employer settles with the union and

agrees to reinstate strikers. But the protection is of

great moment if the employer is not found guilty of

unfair practices, does not settle with the union, or

settles without a promise to reinstate. In that eventual-

ity, the employer, although he has prevailed in the

strike, may refuse reinstatement only if he has hired

replacements on a permanent basis. If he has promised

to keep the replacements on in such a situation, dis-

charging them to make way for selected strikers

whom he deems more experienced or more efficient

would breach his contract with the replacements.

Those contracts, it seems to us, create a sufficiently

24 No. 07-3885

permanent arrangement to permit the prevailing

employer to abide by its promises.

Id. at 503-04 (citation omitted). In a footnote, the

Court explained that the Board’s decision in Covington

Furniture was not to the contrary. The Court noted that

in Covington Furniture “the replacements could be fired

at the will of the employer for any reason” and that “the

employer would violate no promise made to a replace-

ment if he discharged some of them to make way for

returning strikers, even if the employer was not required

to do so by the terms of a settlement with the union.” Id. at

505 n.8 (citing Covington Furniture Mfg. Corp., 212 NLRB at

214). The Union relies on this language to argue that an

employer cannot hire a permanent replacement unless

it offers the replacement a binding contract under state law.

We are not persuaded by the Union’s contention that

Belknap is controlling under the circumstances of the

present case. The Belknap Court held that federal labor

law did not preempt causes of action brought in state

court by aggrieved replacement employees. That

holding, to be sure, led the Court to alter the standard for

permanence, and the alteration of that standard was a

major point of contention among the various opinions

written in the case. Compare Belknap, 463 U.S. at 503-04 &

n.8 (opinion of White, J.), with id. at 513-17, 522-23

(Blackmun, J., concurring), and id. at 541 n.13 (Brennan, J.,

dissenting). Despite its alteration of the standard of

permanence, however, the Court did not, as the Union

submits, hold that an employer may avail itself of perma-

nent replacement employees only if it offers those em-

No. 07-3885 25

ployees a binding contract actionable under state law.

Indeed, rather than tightening the standard for perma-

nence, as the Union contends, the Court actually loosened

that standard: It allowed an employer to condition its

offers of permanent employment on its settlement with

the union and on an NLRB unfair labor practice order

directing reinstatement of strikers. See id. at 513 (Blackmun,

J., concurring) (criticizing the Court’s approach of allow-

ing employers to condition their offers of permanent

employment because “[s]uch a promise bears little resem-

blance to a promise of permanent employment”); id. at 541

n.13 (Brennan, J., dissenting) (“It is difficult to imagine . . .

how a conditional offer like the one described by the

Court could be construed as an offer of permanent em-

ployment.”). Shortly before the dictum that the Union

cites regarding Covington Furniture, the Court recognized

that simply because “the offer and promise of permanent

employment are conditional does not render the hiring

any less permanent if the conditions do not come to pass,”

and it also noted that “[a]ll hirings are to some extent

conditional.” Id. at 504 n.8; see also Gibson Greetings, Inc. v.

NLRB, 53 F.3d 385, 390 (D.C. Cir. 1995) (“Although . . . the

new ‘associates’ could be laid-off in the event of a business

slowdown . . . , such conditions do not render an offer of

employment non-permanent.” (citing Belknap, 463 U.S.

at 503-04 & n.8)).

Belknap’s recognition that an employer could hire per-

manent employees for economic striker-replacement

purposes is consistent with then-existing Board precedent.

As we have recounted, the Board consistently has

allowed employers to hire permanent employees while

concomitantly imposing certain conditions on their re-

26 No. 07-3885

tention, so long as there is a mutual understanding that

the employer’s desire to reinstate a striker will not cause

the replacement employee’s discharge. See Anderson,

Clayton & Co., 120 NLRB 1208, 1214 (1958) (employees

subject to a “6-month probationary period for all new

employees during which it was free to discharge, transfer,

or otherwise handle an employee without recourse”

nevertheless was a permanent employee).5 The Board never

has adopted a requirement that employers must offer

the putative permanent employees a binding contract of

employment under state law;6 nor has the Board adopted

5

See also J.M.A. Holdings, Inc., 310 NLRB at 1349 (concluding

that replacement workers were permanent—despite the fact that

the employees were expressly advised that they were employed

on an at-will basis and that “they had not completed the

employment application, physical, and drug test”—because

there was a mutual understanding that the resolution of the

strike would not affect whether the employees were retained);

Kansas Milling Co., 97 NLRB at 226; cf. NLRB v. Augusta Bakery

Corp., 957 F.2d 1467, 1473 (7th Cir. 1992) (holding that the

replacements were temporary because, although the replace-

ments were told that “if they worked out and did their job,

they had a job,” the testimony of the replacements indicated

that they did not understand themselves to be permanent

employees); Cyr Bottle Gas Co., 204 NLRB 527, 527 (1973)

(holding that an employee is not permanent where the em-

ployee’s job depended not only on the employee’s performance

during the probationary period, but also on “when the

strikers came back to work”).

6

We note that, despite the Union’s reliance on the Belknap

Court’s characterization of Covington Furniture, that case does

(continued...)

No. 07-3885 27

such a rule subsequent to Belknap.7

Consequently, we cannot accept the Union’s argument

that Belknap decided that an employer may avail itself of

permanent replacement employees only if it offers those

employees a binding contract actionable under state law.

6

(...continued)

not support the Union’s position. In Covington Furniture, the

Board did not have an opportunity to consider the effect of an

at-will employment disclaimer on an employer’s claim that it

had hired permanent employees because there was no at-will

employment disclaimer at issue. Moreover, and more to the

point, the Board found that the employer’s hiring offer was

“subject to cancellation” at the employer’s choice because there

was no evidence of “any promise by [the employer] to the

replacements that they were permanent replacements.”

Covington Furniture Mfg. Corp., 212 NLRB 214, 220 (1974), enf’d,

514 F.2d 995 (6th Cir. 1975) (emphasis added). Given the

absence of evidence of such a promise, the Board further noted,

the “implication from the method of hiring, and the learning

periods needed, was that the jobs might well be temporary.” Id.

7

In Solar Turbines, for example, the Board relied on Belknap’s

observation that all hirings are to some extent conditional in

holding that “so long as the replacement workers and the

[employer] intended that the workers’ employment not termi-

nate at the conclusion of the strike, the fact that the replace-

ments had yet to complete these postinterview tests at the

conclusion of the strike did not render them temporary

workers subject to discharge.” 302 NLRB at 15-16 (footnote

omitted).

28 No. 07-3885

3.

The Union next submits a series of related arguments

for why the Board’s decision is inconsistent with the

Act. Echoing the observations of one of the dissenting

Board members, it contends that Jones Plastic’s purported

offer of permanent employment was illusory for purposes

of federal labor law because it allowed the company to

keep all of its options open and therefore permitted Jones

Plastic to manipulate the reinstatement procedure by

discharging permanent replacements in order to recall

selected strikers under whatever standard suited the

company. An employer could decide, for example, to

reinstate strikers who exhibit a lack of union fervor.

We cannot accept the Union’s assertion that Jones Plas-

tic’s offer of permanent employment was illusory because

it somehow kept all of Jones Plastic’s options open. Such

a characterization misapprehends the Board’s decision.

Although the Board overruled its previous decision in

Target Rock, it did so only to the extent that Target Rock

“suggests that at-will employment is inconsistent with

or detracts from an otherwise valid showing of permanent

replacement status.” Jones Plastic, 351 NLRB No. 11, at *10.

Indeed, the dissenting Board members agreed with

the majority that an employer’s “recitation of at-will

language is not fatal to its position” that it hired perma-

nent replacements. Id. at *14 n.13. Importantly, the

Board did not overrule the totality-of-the-circumstances

approach that it historically has employed to determine

whether an employer has established a “mutual under-

standing of permanence” with the replacement employ-

No. 07-3885 29

ees. Under this totality-of-the-circumstances approach,

Jones Plastic could not have fired some of the replacements

in favor of some of the strikers while denying reinstate-

ment to the remainder of the strikers on the ground that

the replacements were permanent. Plainly, such conduct

would constitute nearly incontrovertible evidence that

the replacements—despite their label as “permanent”—

were not in fact permanent. Thus, contrary to the dis-

senting Board members’ view and the Union’s argument,

Jones Plastic has not kept all of its options open.

Indeed, there were additional checks, as a practical

matter, on Jones Plastic’s options. Had it engaged in such

conduct, Jones Plastic would have risked a promissory

fraud or breach of contract lawsuit brought by the dis-

charged replacements under Tennessee law. Based on

Jones Plastic’s representations to the replacement em-

ployees that they were permanent employees in relation

to the strikers whom they were being hired to replace,

these discharged permanent employees would have

been free, see Belknap, 463 U.S. at 503, to argue to a state

court that Jones Plastic was liable under state law for

firing them in favor of the returning strikers. See, e.g.,

Hudson v. Insteel Indus., Inc., 5 Fed. App’x 378, 386 (6th

Cir. 2001) (unpublished) (noting that, “Tennessee’s

employment-at-will doctrine notwithstanding, a promis-

sory fraud claim may go forward, in the absence of an

employment contract, where ‘an employer makes an

offer of long-term, permanent employment with no

present intention of keeping its promises’ ” (quoting Lee

v. Hippodrome Oldsmobile, Inc., 1997 WL 629951, at *2 (Tenn.

Ct. App. Oct. 14, 1997))). Additionally, had the replace-

30 No. 07-3885

ment employees been discharged in favor of the returning

strikers, the replacements would have had an arguable

claim for breach of contract.8 We conclude, accordingly,

that Jones Plastic’s offer of permanent employment did not

allow Jones Plastic to keep all of its options open. We

emphasize, nevertheless, our determination earlier in

this opinion that, under Belknap, an offer of employ-

ment may be considered permanent for purposes of

federal labor law without necessarily being an enforce-

able contract under state law.

The Union further contends that, under the Board’s

decision, an employer could manipulate the reinstate-

ment procedure by discharging permanent replacements

to permit the recall of selected strikers, such as those

who exhibit a lack of union fervor or who have greater

skills or work ethic. We agree with the Union that it

8

The document that the replacement employees signed when

they accepted employment with Jones Plastic stated: “I [name of

replacement employee] hereby accept employment with 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.” Jones

Plastic & Eng’g Co. & United Steel Workers, 351 NLRB No. 11, *4

(Sept. 27, 2007). One possible interpretation of this language is

that the statement of permanence contained in this form is an

exception to the at-will language and therefore creates an

enforceable contract that Jones Plastic will not discharge the

replacement employee in favor of a returning striker. See

infra note 10.

No. 07-3885 31

would be problematic if an employer could manipulate

the reinstatement process to discriminate against employ-

ees who demonstrate a greater affinity for a union. How-

ever, the premise upon which this argument is based—that

the Board’s decision sanctions such conduct—is unsound.

An employer who discharges ostensibly permanent

replacements in favor of strikers who are less enthusiastic

about the union would commit an unfair labor practice

under section 8(a)(3) of the NLRA. NLRB v. Mackay Radio

& Tel. Co., 304 U.S. 333, 346-47 (1938); Aqua-Chem., Inc.

v. NLRB, 910 F.2d 1487, 1489 (7th Cir. 1990). In Mackay

Radio, the Supreme Court held unequivocally that an

employer who refuses to reinstate strikers on the basis

of their activity in a union violates the NLRA. Mackay

Radio, 304 U.S. at 346-47.

The Union also submits that the Board’s decision con-

travenes the Act because it allows employers to discharge

ostensibly permanent replacements in favor of formerly

striking employees who have greater skills or work ethic.

As we have explained, a union would be free to argue,

under the Board’s totality-of-the-circumstances approach,

that an employer’s discharging of select employees in favor

of formerly striking employees with greater skills may well

constitute evidence that the putatively permanent employ-

ees were not actually permanent. Furthermore, an em-

ployer who engaged in such conduct might subject itself to

contract liability in the state courts; this potential liability

may serve as a check on an employer’s ability to pursue

this course. In any event, there are no allegations that Jones

Plastic engaged in this sort of manipulation here, and the

NLRB is the appropriate institutional actor to address this

32 No. 07-3885

issue in the first instance, should it arise. As the Supreme

Court has reminded us:

[I]n many . . . contexts of labor policy, the ultimate

problem is the balancing of the conflicting legitimate

interests. The function of striking that balance to

effectuate national labor policy is often a difficult and

delicate responsibility, which the Congress com-

mitted primarily to the National Labor Relations

Board, subject to limited judicial review.

NLRB v. Kentucky River Cmty. Care, Inc., 532 U.S. 706, 725

n.5 (2001) (internal quotation marks, citations and alter-

ations omitted).

4.

Finally, the Union concedes that at-will employment can

be harmonized with federal labor law’s standard of

permanence; it petitions, however, for a rule requiring

that employers expressly advise employees that they

cannot be discharged to make way for returning strikers

but that they otherwise are employed on an at-will basis.

The Union proposes the following language: “I understand

that my employment with [the employer] may be termi-

nated by myself or [the employer], at any time, with or

without cause, for any reason other than to permit the

return of a striker unless the return of such striker is

required by a strike settlement agreement reached be-

tween [the employer] and [the union] or by order of the

[NLRB].” Reply Br. at 16-17.

No. 07-3885 33

The Supreme Court repeatedly has emphasized that “the

NLRB has the primary responsibility for developing and

applying national labor policy.” NLRB v. Curtin Matheson

Scientific, Inc., 494 U.S. 775, 786 (1990) (noting that the

NLRB “must have authority to formulate rules to fill the

interstices of the broad statutory provisions” with which

“Congress entrusted” it); see also Holly Farms Corp. v. NLRB,

517 U.S. 392, 398-99 (1996). Consequently, when the NLRA

is “ ‘silent or ambiguous’ with respect to the issues in-

volved, the NLRB’s interpretation of what obligations

the parties have under the NLRA will be affirmed if it is

‘based on a permissible construction’ ” of that statute. Prod.

Workers Union v. NLRB, 161 F.3d 1047, 1050 (7th Cir. 1998)

(quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 837, 843 (1984)). Under these circumstances,

the Board’s legal conclusions shall be upheld if they are not

“irrational or inconsistent with the Act.” NLRB v. Fin.

Inst. Employees, 475 U.S. 192, 202 (1986).

The NLRA does not define what constitutes a perma-

nent striker replacement; it does not delineate what

evidence may be used to establish that an employee is

permanent; and it is silent as to how offers of permanent

employment interact with at-will employment, a ubiqui-

tous, if not uniform, mode of employment. Under these

circumstances, we must uphold the Board’s legal conclu-

sions on how best to proceed unless its conclusions are

“irrational or inconsistent” with the NLRA. Fin. Inst.

Employees, 475 U.S. at 202. Under this standard of review,

we cannot accept the Union’s contention that the Board

should have adopted a rule requiring that employers

34 No. 07-3885

expressly advise employees that they cannot be dis-

charged to make way for returning strikers but that they

otherwise are employed on an at-will basis. Indeed, the

Board spoke directly to this issue and determined that

such a proposal would not be a satisfactory way of dealing

with situations arising in this area. The Board did note

that the language that the Union proposed “would

support a finding of permanent replacement status,” but

it also pointed out that it has “eschewed a requirement

that specific language be used to establish the required

mutual understanding of ‘permanent’ employee status.”

Jones Plastic, 351 NLRB No. 11, at *9 n.9. The Board’s

determination that a totality-of-the-circumstances ap-

proach is preferable to a rigid formulation is certainly

worthy of our deference. As the Board’s treatment of the

issue in this case also underlines, the approach suggested

by the Union would also have the effect of implying that,

in order to be considered permanent, an employee must

have a contract of employment that guarantees perma-

nency, a requirement that the Board consistently has

refused to require as a matter of federal labor policy.9 In

short, the Board’s conclusions are not unreasonable

or inconsistent with the NLRA.

9

Jones Plastic, 351 NLRB No. 11, at *9 n.9 (United Steel’s

proposed rule “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 uniform labor policy.”).

No. 07-3885 35

C. Substantial Evidence

As we already have noted, the Board acted well within

its authority in determining that the question of whether

a replacement employee should be considered “perma-

nent” in the context of ascertaining the rights of workers

returning from an economic strike should be governed

by a totality-of-the-circumstances test. Applying that test

in this case, the Board interpreted the form signed by the

replacement employees and concluded that the document

evinced a mutual understanding of permanence between

the replacement employees and the employer. The Board’s

construction of the document is a reasonable one, and

therefore it is entitled to our deference. NLRB v. Champion

Labs, Inc., 99 F.3d 223, 227 (7th Cir. 1996) (noting that, “in

analyzing [the Board’s] application of law to particular

facts,” this court defers to the Board’s inferences and the

legal conclusions that it draws from those facts); Augusta

Bakery, 957 F.2d at 1474 (“Where two inferences can be

drawn . . . it is within the Board’s province to determine

which is appropriate.”); see also Brandeis Mach. & Supply

Co. v. NLRB, 412 F.3d 822, 829 (7th Cir. 2005). Notably,

the Board’s construction of the form is consistent with

well-established interpretative principles.1 0

10

Cf. Edwin W. Patterson, The Interpretation and Construction of

Contracts, 64 Columb. L. Rev. 833, 854-55 (1964) (“If one of those

provisions is general enough to include the specific situation to

which the other is confined, the specific provision will be

deemed to qualify the more general one, that is, to state an

exception to it.”); see also Townsend v. Little, 109 U.S. 504, 511

(continued...)

36 No. 07-3885

Faithful to the totality of circumstances approach that it

historically has used, the Board did not rely simply on its

interpretation of Jones Plastic’s hiring form. Additionally,

it evaluated the other circumstances in the case and

determined that this evidence also favored a determination

of permanence. Jones Plastic’s human resources manager

had told one replacement that he was a permanent em-

ployee, and Jones Plastic presented evidence that at least

three of the striker replacements had considered them-

selves permanent employees in relation to the strikers. In

all of its communications with the Union, moreover, Jones

Plastic consistently had maintained that the replacement

employees were permanent. The at-will disclaimer in the

form, clearly the most significant piece of evidence that

might have supported a contrary determination, was

construed reasonably by the Board as not allowing Jones

Plastic to terminate the replacements in favor of the

returning strikers.

Given the totality of the circumstances, therefore, the

Board reasonably concluded that Jones Plastic had a

10

(...continued)

(1883) (“[G]eneral and specific provisions, in apparent contra-

diction . . . and without regard to priority of enactment, may

subsist together, the specific qualifying and supplying excep-

tions to the general.”); Farnham v. Windle, 918 F.2d 47, 49 (7th

Cir. 1990) (“[W]here there are two statutory provisions, one of

which is general and designed to apply generally, and the other

is specific and relates to only one subject, the specific provision

must prevail and must be treated as exception [sic] to the

general provision.” (internal quotation marks and citation

omitted)).

No. 07-3885 37

mutual understanding of permanence with the replace-

ment employees, despite the replacements’ otherwise at-

will status. Accordingly, the Board properly concluded

that Jones Plastic had proffered a legitimate and substan-

tial business justification for refusing to discharge the

replacement employees at the end of the strike to make

way for the formerly striking employees. See Fleetwood

Trailer Co., 389 U.S. at 378.

Conclusion

Because the determination of the Board has a reasonable

basis in law and is supported by substantial evidence,

the petition for review is denied.

P ETITION FOR R EVIEW D ENIED

W OOD , Circuit Judge, concurring in the judgment. The

Union may not realize it upon its first reading of the

majority’s opinion, but it has in fact won the war even if

it lost the battle over what happened at Jones Plastic and

Engineering Company (the Company). My concern

over the majority’s opinion is that portions of it might be

read to endorse more of the Board’s legal approach in

this case than I believe it actually has done. I thus write to

summarize what I believe we are holding, and why I am

38 No. 07-3885

concurring in the ultimate judgment to deny the Union’s

petition for review.

The question before the Board, succinctly put, was

whether the workers that Jones Plastic hired during the

Union’s economic strike were permanent or temporary. If

they were permanent, then under well-established rules,

the Company was under no obligation to release them

when the Union made its unconditional offer to return

the striking employees to work. See Mackay Radio & Tel.

Co. v. NLRB, 304 U.S. 333, 345-46 (1938). If the replace-

ments were temporary, then the employer cannot demon-

strate the “legitimate and substantial business justifica-

tions” for refusing to reinstate the strikers that is neces-

sary to avoid a finding of an unfair labor practice. See

NLRB v. Fleetwood Trailer Co., 389 U.S. 375, 378 (1967),

quoting NLRB v. Great Dane Trailers, 388 U.S. 26, 34 (1967).

In this case, the Board had to decide how to apply these

rules to a reinstatement offer that promised only employ-

ment at will and that emphasized that the replacement’s

“employment with Jones Plastic may be terminated by

[the replacement] or by Jones Plastic at any time, with or

without cause.” See ante, at 3.

Both the Union and the two dissenting members of the

Board are concerned that an offer like this one erases the

distinction between a permanent and a temporary re-

placement. As the dissenters put it, the Jones Plastic offer

“created a situation in which ‘the replacement could be

fired at the will of the employer for any reason; the em-

ployer would violate no promise made to a replacement

if it discharged some of them to make way for returning

No. 07-3885 39

strikers.’ ” Jones Plastic & Eng’g Co. & United Steel Workers,

351 NLRB No. 11, at *10 (Sept. 27, 2007). The Union argues

that such open-ended discretion on the part of the Com-

pany would allow it to discharge just enough replace-

ment workers to create job openings for striking workers

who had become disenchanted with the Union or who

promised to oppose further unionization efforts. It points

out that the classic definition of employment “at will” is

an arrangement under which “absent express agreement

to the contrary, either employer or employee may termi-

nate their relationship at any time, for any reason. . . . Such

employment relationship is one which has no specific

duration, and such a relationship may be terminated at

will by either the employer or the employee, for or without

cause.” See B LACK’S L AW D ICTIONARY at 525 (6th ed. 1990).

Although there are some narrow limitations on the em-

ployer’s discretion—for example, Illinois recognizes an

exception for cases in which an at-will employee is fired

because he reported dangerous or illegal activities at

work, see Robinson v. Alter Barge Line, Inc., 513 F.3d 668, 671

(7th Cir. 2008), and at-will employees may state claims for

racial discrimination in employment under 42 U.S.C.

§ 1981, see Walker v. Abbott Laboratories, 340 F.3d 471, 476

(7th Cir. 2003)—this case presents the question whether a

company is entitled to exercise its discretion to fire an at-

will employee solely because it wants to bring back

strikers in the absence of a formal settlement or order

from the Board. In my view, the majority has answered

that question “no,” for the reasons I outline below.

First, the majority reaffirms the rule that the burden of

proving that a replacement worker is permanent lies on the

40 No. 07-3885

employer. Ante, at 15. Second, it accepts the Board’s

“totality of the circumstances” approach to the deter-

mination whether a position is permanent or temporary.

Ante, at 16. Third, just as both the majority and dissenting

members of the Board did, the majority holds that it is

possible for an at-will employee to be a permanent replace-

ment: under all the circumstances, some will be, and some

will not be. Finally, and critically, the majority rules that:

[T]he Board consistently has allowed employers to

hire permanent employees while concomitantly impos-

ing certain conditions on their retention, so long as there

is a mutual understanding that the employer’s desire to

reinstate a striker will not cause the replacement employee’s

discharge.

Ante, at 25-26 (emphasis added). The language in italics is

conceptually identical to the rule for which the Union

argued here. As the majority notes, ante, at 13 n.1, the

Union took the position that the following language

would address its concerns:

I understand that my employment with [the

employer] may be terminated by myself or [the

employer], at any time, with or without cause, for

any reason other than to permit the return of a striker

unless the return of such striker is required by a

strike settlement agreement reached between [the

employer] and [the union] or by order of the [NLRB].

The Board majority rejected the Union’s solution, saying

that it was not prepared to require “specific language” of

any type. In my view, that is not what the Union was

No. 07-3885 41

requesting; it was saying only that the idea conveyed in the

language it suggested had to be communicated to the

replacement workers, and it was offering one verbal

formulation that would do the job. The majority is

willing to accept the Board’s argument that the Union’s

suggestion was “too complicated,” ante at 13 and 33, but

I do not. No matter—as the Board itself recognized, the

precise language is not the point: it is the concept that

must be communicated to the replacement worker. The

majority suggests that “[o]ne possible interpretation of [the

Jones Plastic form] is that the statement of permanence

contained in this form is an exception to the at-will lan-

guage and therefore creates an enforceable contract that

Jones Plastic will not discharge the replacement employee

in favor of a returning striker.” Ante, at 30 n.8. I agree with

them that this is “one possible interpretation.” Moreover,

reading the majority’s opinion as a whole, I conclude

that it is the necessary interpretation. That is the only

approach that is consistent with the majority’s observa-

tion that “[u]nder [the] totality-of-the circumstances

approach, Jones Plastic could not have fired some of the

replacements in favor of some of the strikers while denying

reinstatement to the remainder of the strikers on the

ground that the replacements were permanent.” Ante,

at 29.

In the end, therefore, the majority has placed an impor-

tant gloss on the decision of the Board majority. That gloss

is exactly what the Union requested, as a matter of law.

Before a replacement worker who was hired as an em-

ployee at will can be characterized as “permanent,” and

thus before an employer may refuse to release the

42 No. 07-3885

worker when the economic strikers make an uncondi-

tional offer to return to work, the company must somehow

make it clear that the employer’s normal discretion to

fire the at-will replacement employee is constrained: it

may not fire the at-will worker just to create a position

for a returning striker, unless that action is required either

by a strike settlement agreement or by an order of the

Board.

All that remains is the question how to apply these

rules. The majority rightly notes that the court must

defer to the Board’s factual determinations. One of those

determinations is the question whether, under the

totality of the circumstances, the Jones Plastic replacement

workers were permanent or temporary. The Board major-

ity’s opinion does not spell out the limitations on the

employer’s discretion with respect to at-will employees

as well as the majority’s opinion does. But, on these

facts and bearing in mind the applicable standard of

review, it is possible to find that the Company satisfied

its burden of proof. I therefore concur in the judgment.

9-15-08