Oak Harbor Freight Lines, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 23, 2017 Decided May 2, 2017

No. 14-1226

OAK HARBOR FREIGHT LINES, INC.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

TEAMSTERS 174 AND TEAMSTERS LOCAL NUMBERS 81, 174,

231, 252, 324, 483, 589, 690, 760, 763, 839, AND 962,

INTERVENORS

Consolidated with 14-1273, 15-1002

On Petitions for Review and Cross-Application

for Enforcement of an Order of

the National Labor Relations Board

Peter N. Kirsanow argued the cause for petitioner Oak

Harbor Freight Lines, Inc. With him on the briefs were John M.

Payne and Selena C. Smith. Patrick O. Peters entered an

appearance.

Thomas A. Leahy argued the cause and filed the briefs for

petitioner Teamsters Union Local 174, et al.

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Jared D. Cantor, Attorney, National Labor Relations Board,

argued the cause for respondent. With him on the brief were

Richard F. Griffin, Jr., General Counsel, John H. Ferguson,

Associate General Counsel, Linda Dreeben, Deputy Associate

General Counsel, and Usha Dheenan, Supervisory Attorney.

Peter N. Kirsanow, John M. Payne, and Selena C. Smith

were on the brief for intervenor Oak Harbor Freight Lines, Inc.

Thomas A. Leahy was on the brief for intervenors Teamsters

Local 174, et al.

Before: GARLAND, Chief Judge, ROGERS, Circuit Judge,

and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROGERS.

ROGERS, Circuit Judge: The National Labor Relations Act

requires employers to bargain in good faith “with respect to

wages, hours, and other terms and conditions of employment.”

29 U.S.C. § 158(a)(5), (d). Upon the expiration of a collective

bargaining agreement, the parties to that agreement have an

ongoing obligation to maintain the “status quo” as to all

mandatory subjects of bargaining until they reach a new

agreement or an impasse. NLRB v. Katz, 369 U.S. 736, 743

(1962); Laborers Health & Welfare Tr. Fund for N. Cal. v.

Advanced Lightweight Concrete Co., 484 U.S. 539, 544 n.6

(1988); Triple A Fire Prot., Inc., 315 NLRB 409, 414 (1994).

Absent an impasse, unilateral action changing the status quo of

a mandatory subject of bargaining violates Section 8(a)(5) of the

Act as a “circumvention of the duty to negotiate.” Katz, 369

U.S. at 743. Pension and healthcare benefits are mandatory

subjects of bargaining. See Allied Chem. & Alkali Workers of

Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., Chem.

Div., 404 U.S. 157, 180 (1971). Both requirements are

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implicated here.

Oak Harbor Freight Lines, Inc. and several locals of the

Teamsters Union established four health benefit and pension

trusts, so-called “Taft-Hartley” trusts, as part of their collective

bargaining agreement. Under that agreement, Oak Harbor was

required to make monthly contributions to the trusts. When the

agreement expired and no new agreement was reached after a

year, Union employees went on strike. When Oak Harbor

ceased making contributions to the trusts, the Union filed unfair

labor practice charges. The National Labor Relations Board

ruled the Union had waived its right to bargain over the

cancellation of contributions in subscription agreements to three

of the trusts after the collective bargaining agreement expired,

and Oak Harbor, having failed to prove a fourth subscription

agreement existed or other basis to find a union waiver, violated

Sections (8)(a)(5) and (1) of the National Labor Relations Act

by ceasing to make payments to the fourth trust. The Board also

ruled that Oak Harbor’s unilateral imposition of its medical plan

after the strike ended violated the Act. Both Oak Harbor and the

Union filed petitions for review of the Board’s Decision and

Order. For the following reasons, we deny the petitions for

review and grant the Board’s cross-application to enforce its

Order.

I.

Oak Harbor is a freight transportation company operating

throughout the northwestern United States. Since at least 1992,

local Teamsters unions (together, “the Union”) have represented

Oak Harbor employees based in Washington, Oregon, and

Idaho, engaging in joint bargaining for a single collective

bargaining agreement. As relevant, the latest collective

bargaining agreement was effective from November 1, 2004

until October 31, 2007. It required Oak Harbor to make

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monthly contributions to four “Taft-Hartley” trusts for employee

health benefits and pensions, 29 U.S.C. § 186(c)(5), and set the

contribution rate for each trust.

Negotiations for a new collective bargaining agreement

began in August 2007. More than a year later, the parties still

had not reached a new agreement, and on September 22, 2008,

Union employees went on strike. Oak Harbor sent letters to the

Union and to the four trusts, notifying them of its intent to cease

making contributions to the trusts five days after the notices

were received. The letters to three trusts — Washington

Teamsters Welfare Trust, the Western Conference of Teamsters

Pension Trust Fund, and the Retirees Welfare Trust —

referenced cancellation provisions in the trust subscription

agreements or employer-union pension certifications

(collectively, “subscription agreements”). The cancellation

provision in the Retirees Welfare Trust’s subscription agreement

stated:

Upon expiration of the current or any subsequent

bargaining agreement requiring contributions, the

employer agrees to continue to contribute to the trust in

the same manner and amount as required in the most

recent expired bargaining agreement until such time as

the [employer or union] either notifies the other party

in writing . . . of its intent to cancel such obligation five

days after receipt of notice or enter[s] into a successor

bargaining agreement.

The cancellation provisions for the other two trusts were

virtually identical. With respect to the fourth trust — the

Oregon Warehouseman’s Trust — Oak Harbor wrote:

We are not certain whether Oak Harbor Freight Lines

has a subscription agreement with the Oregon

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Warehouseman’s Trust, which contains a Notice to

Cancel Provision. If such a provision exists in a

Subscription Agreement signed by Oak Harbor Freight

Lines, please be advised that this constitutes Notice of

Intent to Cancel.

Letter from John M. Payne, Esq. (Sept. 23, 2008). Five days

after receipt of the letters, Oak Harbor ceased contributions to

the four trusts.

During the strike, Oak Harbor hired strike replacements,

which included “crossover employees,” i.e., Union members

who crossed the picket line. It considered itself obligated to

continue making trust payments for the crossovers during the

strike. When informed the trusts would not accept contributions

on behalf of only these Union members, Oak Harbor proposed

that for the duration of the strike it would make pension

contributions to an escrow account and “temporarily cover its

crossovers” under Oak Harbor’s medical plan. Mem. from John

M. Payne, Esq., to Union Representatives Al Hobart, Buck

Holliday, and Ken Thompson (Oct. 3, 2008). The Union agreed.

Then, on February 17, 2009, five days after the Union extended

an unconditional offer for its members to return to work, Oak

Harbor proposed “to continue the [February 17] status quo

regarding wages and benefits” for the returning strikers; that is,

the interim strike arrangement would continue for all employees:

pension contributions would be paid to escrow accounts and

medical coverage would be provided under Oak Harbor’s

medical plan. The Union disagreed with Oak Harbor’s

understanding of its “status quo” obligation and countered with

a proposal for an “interim agreement” with the trusts in order to

allow trust contributions to resume during negotiations for a new

collective bargaining agreement. Oak Harbor refused, and when

strikers returned to work on February 26, 2009, Oak Harbor

unilaterally imposed the terms in its February 17th letter.

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The Union filed unfair labor practice charges with the

Board in light of Oak Harbor’s cessation of trust payments and

unilateral imposition of its medical plan after the strike ended.

An administrative law judge (“ALJ”) found no unfair labor

practice by Oak Harbor in ceasing to make contributions to the

trusts in view of the subscription agreements, but concluded Oak

Harbor’s unilateral action placing Union employees under its

medical plan after the strike ended violated Sections 8(a)(5) and

(l) of the Act. Both parties appealed. The Board adopted the

ALJ’s finding and conclusions on Union waiver except with

regard to Oak Harbor’s cessation of payments to the Oregon

Warehouseman’s Trust. As to that trust, the Board found Oak

Harbor had failed to prove there was a subscription agreement

or present other evidence that the Union had clearly and

unmistakably waived its right to bargain over the cancellation of

contributions. It ordered Oak Harbor, upon the Union’s request,

to make all post-strike payments to the Oregon Warehouseman’s

Trust, restore the pre-strike status quo for health care benefits,

and reimburse employees, with interest, for any expenses

resulting from the failure to make the required payments to that

trust. The Union and Oak Harbor petition for review of the

Board’s Decision and Order.

II.

The Union challenges the Board’s finding that it clearly and

unmistakably waived its right to bargain over cancellation of

contributions to the three trusts. It maintains that the Board

inappropriately considered extrinsic evidence to the expired

collective bargaining agreement when it looked to the terms of

the subscription agreements, and that those agreements were

only “ministerial” documents incapable of demonstration of the

Union’s clear and unmistakable waiver. The court will uphold

the decision of the Board unless it was arbitrary or capricious or

contrary to law, and as long as its findings of fact are supported

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by substantial evidence in the record as a whole. Wayneview

Care Ctr. v. NLRB, 664 F.3d 341, 348 (D.C. Cir. 2011); Pirlott

v. NLRB, 522 F.3d 423, 432 (D.C. Cir. 2008). Substantial

evidence, which is “more than a mere scintilla,” is “such

relevant evidence as a reasonable mind might accept as adequate

to support a conclusion.” Consol. Edison Co. of N.Y. v. NLRB,

305 U.S. 197, 217 (1938); see also Universal Camera Corp. v.

NLRB, 340 U.S. 474, 477 (1951).

The Board properly concluded that the Union waived its

statutory rights to receive and bargain over continued

contributions to the Washington Teamsters Welfare Trust, the

Retirees Welfare Trust, and the Western Conference of

Teamsters Pension Trust Fund. Applying its own test, the Board

determined that the subscription agreements for those trusts

“clearly and unmistakably” authorized Oak Harbor to cease trust

contributions upon expiration of the collective bargaining

agreement after five days’ notice. Under this court’s precedent,

when an “employer acts pursuant to a claim of right under the

parties’ agreement, the resolution of that refusal to bargain

charge rests on an interpretation of the contract at issue.” NLRB

v.United States Postal Ser., 8 F.3d 832, 837 (D.C. Cir. 1993).

Although the Board has declined to adopt this view of the law,

see, e.g., Enloe Medical Center v. NLRB, 433 F.3d 834, 837–38

(D.C. Cir. 2005), this non-acquiescence issue does not matter

here. No party raises the “contract coverage” issue, the Union

maintains that the Board misapplied its own precedent, and the

court would reach the same result regardless of which doctrine

is applied. Contrary to the Union’s contention that the Board

erred in considering the extrinsic evidence of the subscription

agreements but failing to consider its “extrinsic evidence” that

the cancellation terms were not the product of bargaining, the

Board properly concluded that considering the Union’s

additional evidence would not have changed its analysis or

outcome.

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The Union contends that the Board misapplied its own

waiver precedent. In Cauthorne Trucking, the Board found a

clear and unmistakable waiver of a union’s right to bargain over

contributions to trust funds after the expiration of the collective

bargaining agreement where the subscription agreement stated:

It is understood and agreed that at the expiration of any

particular collective bargaining agreement by and

between the Union and [the employer,] any Company’s

obligation under this Pension Trust Agreement shall

terminate unless, in a new collective bargaining

agreement, such obligation shall be continued.

256 NLRB at 722. The Union attempts to show that the

subscription agreements here were “ministerial” and “therefore

not indicative of a bargained-for waiver,” Union Pet’r’s Br. 34,

relying on Schmidt-Tiago Construction Company, 286 NLRB

342 (1987), and American Distributing Company, 264 NLRB

1413 (1982). It also questions the precedential force of

Cauthorne Trucking.

The Union maintains that the cancellation provisions for

the three “Taft-Hartley” trusts are better compared to the

subscription agreements in Schmidt-Tiago and American

Distributing where the Board concluded the text was

ambiguous. An examination of those precedents reveals no

error by the Board. In Schmidt-Tiago, the subscription

agreement stated that the employer and union “certify that a

written labor agreement is in effect between the parties

providing for contributions to the [Trust Fund],” and that the

employer and union “agree to be bound by the [collective

bargaining agreement] and the [subscription agreement] as now

constituted or as hereinafter amended.” 286 NLRB at 365. The

Board found the agreement “does not on its face, as in

Cauthorne Trucking, specifically state that [the employer’s]

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obligation to contribute to the pension trust fund ends with the

expiration of the current collective-bargaining contract.” Id. at

366. Similarly, in American Distributing, where the

subscription agreement stated, “[t]he undersigned employer and

[u]nion hereby certify that a written pension agreement (in most

cases a Teamsters collective bargaining agreement) is in effect

between the parties providing for contributions to the [Trust

Fund],” the Board found no unmistakable waiver of bargaining

after the expiration of the collective bargaining agreement; the

Board explained that “[s]uch language [did] no more than

ministerially attach to the enabling collective-bargaining

agreement for verification and collection purposes.” 264 NLRB

at 1415. Given the plain terms of the cancellation provisions in

the subscription agreements for the three trusts, there can be no

serious disagreement that the Board properly concluded these

cancellation provisions on their face were more like that in

Cauthorne Trucking, 256 NLRB at 722, than in the two cases on

which the Union relies.

To the extent the Union correctly points out that the Board

has applied Cauthorne Trucking “narrowly,” The Finley

Hospital, 359 NLRB 156, 159 n.5 (2012), that is not the same as

questioning its precedential value. Rather, the Board has

explained that it will find a clear and unmistakable waiver of the

right to bargain over the cancellation of trust payments only

where there is explicit contract language authorizing an

employer to cancel its obligations. Id. at 157–158. The three

subscription agreements did just that. There is no merit to the

Union’s view that a ministerial subscription agreement cannot

constitute a valid waiver. As the Board stated, “even assuming

that the cancellation language had been dictated by the Funds

and was not specifically bargained over by the parties, the

signed documents establish that the Unions waived their right to

bargain” over cancellation of contributions to the three trusts.

Board Decision and Order, 1 n.2.

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III.

Oak Harbor’s challenges to the Board’s Decision and Order

are also unpersuasive.

A.

Regarding trust contributions, the Board, as noted, has

determined that waiver of the right to bargain must be shown to

be clear and unmistakable. Provena St. Joseph Med. Ctr., 350

NLRB 808, 810 (2007); see Metro. Edison Co. v. NLRB, 460

U.S. 693, 708 (1983). Oak Harbor, as the party claiming waiver,

had the burden of proof. Good Samaritan Hosp., 335 NLRB

901, 918 (2001). The ALJ apparently inferred the existence of

a subscription agreement for the Oregon Warehouseman’s Trust

based on the existence of subscription agreements for the other

three trusts. But the Board’s contrary finding is supported by

substantial evidence in the record. There was no evidence that

a fourth subscription agreement actually existed, which, absent

other grounds for waiver, was necessary to find that the Union

had clearly and unmistakably waived its right to bargain over the

cancellation of contributions to the Oregon Warehouseman’s

Trust. Oak Harbor attempted to demonstrate the Union’s waiver

through the testimony of its attorney John Payne, but his

testimony was hardly dispositive. He testified one Oregon

Warehouseman’s Trust employee had told him: “I believe we

have a subscription agreement,” and another told him she was

“almost sure” there was a subscription agreement, “but I’ll have

to double check, but we almost always do require one.” Neither

was there evidence that the Oregon Warehouseman’s Trust

expressly denied the existence of a subscription agreement to

Oak Harbor. On the other hand, Oak Harbor does not maintain

that it ever received a copy of a subscription agreement from the

Oregon Warehouseman’s Trust or any confirmation one existed

beyond the trust’s general practice that agreements typically

existed.

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The Board reasonably concluded that, at most, there was

speculation based on an asserted usual practice to have a

subscription agreement that one existed for the Oregon

Warehouseman’s Trust, but no evidence specific to that Trust.

Indeed, even the evidence of the Oregon Warehouseman’s

Trust’s general practice was called into question; an Oregon

Warehouseman’s Trust administrator testified that the trust did

not generally require a subscription agreement. Although the

parties’ expired collective bargaining agreement required Oak

Harbor to make monthly contributions to four trusts, it did not

require that there be subscription agreements with the trusts,

much less that they include a cancellation provision. Oak

Harbor’s notice of cancellation letter to the Oregon

Warehouseman’s Trust confirms the speculative nature as to the

evidence of the existence of a subscription agreement. Absent

evidence to support a finding that a fourth subscription

agreement existed, much less that it existed and contained an

unequivocal cancellation provision like that in the subscription

agreements for the other three trusts, Oak Harbor failed to meet

its burden to show the Union had clearly and unmistakably

waived its right to bargain on contributions to the Oregon

Warehouseman’s Trust.

Oak Harbor’s other attempts to block the Union’s right to

bargain also fail. The Board reasonably rejected its argument

that the Union was estopped from challenging the existence of

a fourth subscription agreement. As Oak Harbor sees it, because

the Union never informed it that there was no subscription

agreement for the Oregon Warehouseman’s Trust, the Union is

“in no position to now benefit by [its] silence and [its]

acquiescence and seek retroactive contributions.” Oak Harbor

Pet’r’s Br. 23. But this is not affirmative evidence that the

Union had informed Oak Harbor that the subscription agreement

existed, and the Board precedent on which Oak Harbor relies is

inapposite. In Manitowoc Ice, Inc., 344 NLRB 1222, 1224

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(2005), the Board found estoppel based on the union’s repeated

acquiescence to the employer’s unilateral changes to the

employer’s profit-sharing plan as a management prerogative. Id.

The union had repeatedly raised the issue of profit-sharing

during negotiations, the employer had repeatedly rejected the

union’s proposal to guarantee profit-sharing, and the union had

ultimately agreed to a collective bargaining agreement that did

not address the profit-sharing plan. Id. at 1223. The Board

concluded that there was “a clear understanding that the

profit-sharing plan would remain a management prerogative,

and that the Union, by its conduct . . . bargained away its interest

in the plan.” Id. at 1224 (internal quotations omitted). By

contrast, no evidence exists here as would show that the Union

discussed and “bargained away” its interest in maintaining

contributions to the Oregon Warehouseman’s Trust. Nor did the

Union fail to object contemporaneously that Oak Harbor was not

bargaining in good faith.

Lehigh Portland Cement Co., 286 NLRB 1366, 1383

(1987), does not advance Oak Harbor’s estoppel claim. There,

the employer took action over the course of a year consistent

with its acceptance of a merger of two unions, including dealing

with the representatives of the newly-merged union. The Board

found that the employer was estopped from challenging the

validity of the merger a year later because “the [e]mployer knew

of the merger and behaved in a way which encouraged justified

reliance by the Union.” Id. Likewise, in Alpha Associates and

Union of Needletrades, 344 NLRB 782 (2005), the employer

was estopped from challenging the validity of the union in light

of the employer’s “voluntary recognition of the [u]nion” and its

“conduct of bargaining with the [u]nion for more than a year

prior to its repudiation of the bargaining agreement,” id. at 783.

It is true that the Union did not challenge the cancellation

of contributions to the Oregon Warehouseman’s Trust on the

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ground there was no subscription agreement, but it did challenge

Oak Harbor’s cancellation of contributions to all four trusts less

than a month after the strike ended when it filed unfair labor

charges. There is no history of Union acquiescence or an

element of surprise in the Union’s position that Oak Harbor

violated the Act when it ceased to make contributions to the four

trusts. Oak Harbor’s consistent position that it validly cancelled

its contributions to the Oregon Warehouseman’s Trust, in turn,

presents no bar to the Union’s challenges.

The Board also properly found there was no evidence that

a “mutual mistake” prevented the Union from challenging the

cessation of contributions to the Oregon Warehouseman’s Trust.

Oak Harbor’s reasoning follows its estoppel argument and is

equally unpersuasive. Its reliance on Americana Healthcare

Center, 273 NLRB 1728 (1985), is misplaced. There, the Board

referred to a mutual mistake only in reaching the conclusion that

terms inadvertently omitted from a collective bargaining

agreement could be read into the final document, and in ruling

that the collective bargaining agreement’s “zipper clause”

therefore could not be invoked by the employer. Id. at 1733; see

also NLRB v. Americana Healthcare Ctr., 782 F.2d 941, 945

(11th Cir. 1986). The record shows no similar circumstances

here.

B.

As to the unilateral action of imposing its medical plan on

employees after the strike ended, in some cases economic

exigency may justify an employer’s unilateral change, but this

is not one of them. Oak Harbor contends that it was merely

applying the status quo in order to assure that returning

employees had health benefits, and that by February 2009, the

status quo had changed as a result of the parties’ arrangement

for crossover employees to be covered by Oak Harbor’s medical

plan. The record shows, however, that the agreement on

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crossover employees during the strike was temporary and that

Oak Harbor itself described it as an “interim measure pending

the outcome of bargaining and of the strike.” Mem. from John

M. Payne, Esq., to Union Representatives Hobart, Holliday and

Thompson (Oct. 3, 2008).

Alternatively, Oak Harbor contends that it was justified in

unilaterally placing Union workers on its medical plan because

the parties had reached an impasse or Oak Harbor faced an

economic exigency. These defenses were properly rejected by

the Board. “A bargaining impasse . . . occurs when good faith

negotiations have exhausted the prospects of concluding an

agreement, leading both parties to believe that they are at the

end of their rope.” TruServ Corp. v. NLRB, 254 F.3d 1105,

1114 (D.C. Cir. 2001) (internal quotations and citation omitted).

Typically, the parties must have reached an impasse as to overall

bargaining: “[i]mpasse over a single issue” will create an overall

bargaining impasse only if that issue “is of such overriding

importance that it frustrates the progress of further

negotiations.” Laurel Bay Health & Rehab. Ctr., 353 NLRB

232, 232 (2008) (internal quotations and citations omitted).

The Board found that there was no overall impasse to

negotiations in February 2009, a finding Oak Harbor does not

challenge. Nor does Oak Harbor suggest that the matter of

health insurance was of such “overriding importance” that its

unilateral action was justified in the absence of an overall

impasse. The Board also could properly reject Oak Harbor’s

position that an economic exigency authorized it to act

unilaterally, finding that Oak Harbor failed to show that it faced

an economic exigency that posed a “heavy burden” and

“require[d] prompt implementation” to justify its conduct at the

end of the strike. Vincent Indus. Plastics, Inc. v. NLRB, 209

F.3d 727, 734 (D.C. Cir. 2000).

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Accordingly, we deny the petitions for review, and we grant

the Board’s cross-application to enforce its Order.