Tramont Mfg., LLC v. Nat'l Labor Relations Bd.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 5, 2018 Decided May 29, 2018

No. 17-1133

TRAMONT MANUFACTURING, LLC,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

Consolidated with 17-1147

On Petition for Review and Cross-Application

for Enforcement of an Order of

the National Labor Relations Board

Tony J. Renning argued the cause for petitioner. On the

briefs was Jenna E. Rousseau.

David A. Seid, Attorney, National Labor Relations Board,

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

John H. Ferguson, Associate General Counsel, Linda Dreeben,

Deputy Associate General Counsel, and Jill A. Griffin,

Supervisory Attorney.

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Before: GARLAND, Chief Judge, and TATEL and MILLETT,

Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Three years ago, the National Labor

Relations Board’s General Counsel filed a complaint against

petitioner Tramont Manufacturing, LLC, alleging that the

company had violated the National Labor Relations Act by

laying off twelve workers without first notifying its employees’

union or bargaining with the union over matters such as the

availability of severance pay or preferential rehiring. Although

unchallenged Board precedent holds that the Act typically

mandates bargaining over such layoff “effects,” Tramont

argued that a provision in an employee handbook that reserved

the company’s right to “implement” layoffs—a provision the

Board agrees Tramont lawfully adopted as an initial

employment term when it first hired the affected workers—

relieved it of this bargaining duty. The Board disagreed,

concluding that the handbook provision, silent as to effects,

should not be read to displace Tramont’s duty under the Act.

Tramont seeks review of this conclusion, as well as certain of

the Board’s factual and remedial determinations. Because we

agree with Tramont that the Board failed adequately to justify

the legal standard governing its interpretation of the handbook,

we remand for further explanation. In all other respects, we

deny the petition for review.

I.

Upon acquiring the assets of a bankrupt manufacturing

company in 2014, Tramont Manufacturing, LLC (“Tramont”),

agreed to rehire many of the company’s employees and

recognize their union, the United Electrical, Radio and

Machine Workers of America (the “Union”). Instead of

adopting the collective-bargaining agreement the Union had

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negotiated with the predecessor company, however, Tramont

opted to exercise the right afforded certain successor employers

under National Labor Relations Board v. Burns International

Security Services, Inc., 406 U.S. 272 (1972), to unilaterally set

the rehired workers’ initial terms and conditions of

employment pending the negotiation of a new collective-

bargaining agreement, see id. at 291 (holding that “the mere

fact that an employer is doing the same work in the same place

with the same employees as his predecessor” does not in and

of itself require the employer to “assume[] the obligations” of

its predecessor’s collective-bargaining contract). Tramont set

out these initial terms in an employee handbook containing a

section covering “Workforce Reductions (Layoffs).” Tramont

Manufacturing, LLC, Handbook: Employee Package and

Benefit Details § 5.5 (May 7, 2014) (Handbook), Joint

Appendix (J.A.) 126. This section—the only handbook

provision Tramont has put at issue in these proceedings—

provided that, “[f]rom time to time, management may decide

to implement a reduction in force” and went on to specify the

“procedures” by which Tramont would “select employees to be

retained” in the event of layoffs. Id. That section said nothing

about what benefits, if any, laid-off workers would receive.

The present dispute kicked off on February 9, 2015, when

Tramont, without first notifying the Union, issued layoff

notices to twelve employees. The president of the Union’s local

chapter (the “Local”), who learned of the layoffs because he

happened to be among the twelve, responded straightaway by

asking Human Resources for a list of laid-off employees, and

Tramont in turn provided a partial list by letter dated

February 25. Shortly thereafter, in response to a request from

the Union’s national representative, Tramont scheduled a

grievance meeting for March 30. At that meeting, the Union

representative requested—for the first time—bargaining over

the layoffs’ effects, including the workers’ rights and benefits,

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and asked that the workers be reinstated with back pay in the

interim. Tramont neither granted this request nor replied to a

later email repeating it.

In response, the Local filed two sets of charges against

Tramont with the National Labor Relations Board (the

“Board”), alleging that the company had committed unfair

labor practices in violation of the National Labor Relations Act

(the “Act”), 29 U.S.C. §§ 151–169; see id. § 158(a) (cataloging

such practices). The Board’s General Counsel declined to take

any enforcement action based on the first set of charges, which

challenged the layoffs, explaining that, as a successor employer

under the Supreme Court’s Burns decision, Tramont had

permissibly “set initial terms and conditions of employment at

the time it hired the predecessor company’s employees” and

that the layoff decisions complied with these terms. Letter from

Richard F. Griffin, Jr., General Counsel, NLRB, to Margot A.

Nikitas, Associate General Counsel, United Electrical, Radio

and Machine Workers of America 1 (Aug. 21, 2015), J.A. 175.

Setting the stage for the issues before us, however, the General

Counsel issued a complaint based on the second set of charges,

which challenged Tramont’s failure to notify the Union of the

layoffs or bargain over their effects. See Complaint and Notice

of Hearing, Tramont Manufacturing, LLC, No. 18-CA-155608

(NLRB Sept. 30, 2015).

Following a hearing on these charges, an administrative

law judge (ALJ) concluded that Tramont had violated the Act

by “fail[ing] to notify the Union of its decision to lay off

[twelve] employees,” and giving the Union no “meaningful

opportunity to bargain” over effects. Tramont Manufacturing,

LLC (Tramont I), 364 NLRB No. 5, at 6 (May 23, 2016).

Recognizing that layoff effects are a mandatory subject of

bargaining under Board precedent, see id. at 5 (citing Lapeer

Foundry & Machine, Inc., 289 NLRB 952, 954–55 (1988)), the

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ALJ rejected Tramont’s argument that the Union had waived

its rights by waiting until March 30 to request effects

bargaining, see id. at 6–7. In the ALJ’s view, Tramont

presented the Union “with a fait accompli” by failing to give

notice of the layoffs until after they had been implemented. Id.

at 6. Because the Union received no adequate opportunity to

invoke its bargaining rights in the first place, the ALJ

concluded, the timing of its eventual request was immaterial to

Tramont’s liability. Id. at 6–7.

The ALJ also rejected Tramont’s argument that the

handbook’s layoff provision relieved it of its bargaining

obligations. In doing so, the ALJ considered two distinct legal

standards. First, the “contract coverage” standard, adopted by

our court, provides that an employer need not bargain over any

subject covered by a collective-bargaining agreement because

that agreement represents the outcome of negotiations between

employer and union and so must be enforced in a way that

respects the bargain struck. Id. at 6 (citing NLRB v. United

States Postal Service, 8 F.3d 832, 836 (D.C. Cir. 1993)). The

ALJ found this standard inapplicable because “the parties did

not bargain” over the handbook terms. Id.

Second, observing that the Board has in any event long

eschewed this court’s contract-coverage standard, the ALJ

went on to apply the Board’s favored rule, which relieves an

employer of its bargaining duty only where a union has made a

“clear and unmistakable waiver” of its rights. Id. Because the

handbook provision on which Tramont relied was “silent about

notification regarding layoffs and the effects of the layoffs,”

the ALJ concluded that, under the waiver standard, the

provision did not relieve Tramont of its duty to bargain. Id.

The Board affirmed in all relevant respects, “[a]ssuming,

without deciding, [that] waiver analysis [was] applicable”

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because, it believed, “[n]o party ha[d] argued that it was

improper for the [ALJ] to apply” the waiver standard. Id. at 1

n.1. Tramont then filed a petition for review in this court,

claiming among other things that it had in fact challenged the

ALJ’s decision to apply the waiver standard. When the Board

acknowledged that it had overlooked this argument, a panel of

this court remanded the case to the Board so that it could

“consider the issue.” Per Curiam Order, Tramont

Manufacturing, LLC v. NLRB, Nos. 16-1184, 16-1231 (D.C.

Cir. Feb. 21, 2017).

The Board then vacated its prior order and, “tak[ing] up

the case anew,” again affirmed the ALJ. Tramont

Manufacturing, LLC (Tramont II), 365 NLRB No. 59, at 1

(Apr. 7, 2017). In its new order, the Board concluded that the

handbook’s layoff provision gave Tramont no basis for

avoiding its obligation to bargain over effects under “either the

‘clear and unmistakable waiver’ standard . . . or the ‘contract

coverage’ standard.” Id. at 2. As for the contract-coverage

standard, the Board, like the ALJ, found “no judicial authority

for the proposition that [it] could apply” absent a bargained

agreement between employer and union. Id. Furthermore, the

Board continued, even if that standard did apply, the cited

handbook provision “[could not] be read to authorize

[Tramont] to refuse to bargain with the Union over the effects

of . . . layoffs” because the provision covered only the criteria

for selecting which workers to lay off. Id. As for the waiver

standard, the Board agreed with the ALJ that the handbook

provision contained no clear and unmistakable waiver of the

Union’s bargaining rights. See id.

Though reaching the same conclusion as it had in its prior,

vacated order, the Board imposed a slightly different remedy.

Whereas the original order had required Tramont to reimburse

the laid-off employees for their job-hunting and interim work-

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related expenses only to the extent that those expenses

exceeded the affected workers’ interim earnings, see

Tramont I, 364 NLRB No. 5, at 1 n.2, the new order, relying

on intervening Board precedent, required the company to

reimburse these expenses irrespective of interim earnings, see

Tramont II, 365 NLRB No. 59, at 1 n.2.

With the Board’s original order vacated, this court

dismissed the petition for review of that order as moot. See

Clerk’s Order, Tramont Manufacturing, LLC v. NLRB, Nos.

16-1184, 16-1231 (D.C. Cir. May 15, 2017). Tramont then

initiated the present action by petitioning for review of the new

order, and the Board cross-applied for enforcement. Tramont

argues that the Board (1) improperly concluded that the

handbook’s layoff provision did not relieve Tramont of its duty

to bargain over effects, (2) erred in affirming the ALJ’s

findings that the Union neither received sufficient notice of the

layoffs nor waived its bargaining rights by failing to timely

invoke them, and (3) lacked authority to impose a remedy more

burdensome than the one imposed in its original order. We

consider these arguments in turn.

II.

We review the Board’s order under a “highly deferential

standard,” setting it aside “only if the Board ‘acted arbitrarily

or otherwise erred in applying established law to the facts at

issue, or if its findings are not supported by substantial

evidence.’” Waterbury Hotel Management, LLC v. NLRB, 314

F.3d 645, 650 (D.C. Cir. 2003) (quoting Plumbers & Pipe

Fitters Local Union No. 32 v. NLRB, 50 F.3d 29, 32 (D.C. Cir.

1995)); see also 29 U.S.C. §§ 160(e), (f) (directing that the

Board’s adequately supported factual findings be treated as

“conclusive”). That said, “[w]hile our review is deferential, we

will not ‘rubber-stamp [Board] decisions,’” Consolidated

Communications, Inc. v. NLRB, 837 F.3d 1, 7 (D.C. Cir. 2016)

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(quoting Erie Brush & Manufacturing Corp. v. NLRB, 700 F.3d

17, 21 (D.C. Cir. 2012)), and we will remand where a Board

order “reflects a . . . lack of reasoned decisionmaking,” Penrod

v. NLRB, 203 F.3d 41, 46 (D.C. Cir. 2000).

A.

We begin with Tramont’s principal argument—that the

Board committed legal error by declining to read the

handbook’s layoff provision as displacing the statutory

obligation to bargain over layoff effects. As Tramont sees it,

the Board was obliged to apply this court’s contract-coverage

standard, relieving the company of any “duty to bargain” over

“subjects already covered by” that provision. United States

Postal Service, 8 F.3d at 836–37. And the provision “covers”

layoff effects, Tramont goes on, because it “specifically

addresses the right of management to ‘implement’ a reduction

in force.” Pet’r’s Br. 33 (emphasis omitted). Alternatively,

Tramont argues that even if the Board permissibly declined to

apply the contract-coverage standard, the challenged order was

nonetheless arbitrary because the Board offered no reasoned

justification for applying the waiver standard in its place.

We have no need to decide whether the handbook

provision covers layoff effects under a contract-coverage

standard because the Board’s decision not to apply that

standard fell “within [its] legitimate policy ambit in

interpreting the National Labor Relations Act.” Enloe Medical

Center v. NLRB, 433 F.3d 834, 837 (D.C. Cir. 2005). Our court

has explained that the contract-coverage standard rests on the

rationale that, once a union and an employer enter into a

collective-bargaining agreement, “the union has exercised its

bargaining right,” United States Postal Service, 8 F.3d at 836

(quoting Department of the Navy v. FLRA, 962 F.2d 48, 57

(D.C. Cir. 1992)), and that the extent to which the agreement

fixes the parties’ rights therefore presents a question of

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“ordinary contract interpretation,” Enloe, 433 F.3d at 839. As

the Board aptly noted in the challenged order, however, this

rationale evaporates where, as here, the employer argues that

its bargaining duties have been displaced not by a bargained-

for contract, but instead by “a handbook provision” that it has

itself “unilaterally implemented . . . and to which the Union

ha[s] never agreed.” Tramont II, 365 NLRB No. 59, at 2.

Tramont cites no precedent—nor are we aware of any—

from this or any court applying the contract-coverage standard

when determining which subjects a Burns successor’s initial

terms and conditions remove from mandatory bargaining, let

alone any precedent holding that the Board must apply this

standard. Instead, Tramont asserts that “[t]his situation is no

different than one involving a current collective bargaining

agreement, or a situation where an employer must maintain the

status quo after expiration of a collective bargaining

agreement.” Reply Br. 9; see also Wilkes-Barre Hospital Co.

v. NLRB, 857 F.3d 364, 376–77 (D.C. Cir. 2017) (applying

contract-coverage standard to the terms of a collective-

bargaining agreement that had expired but that “continue[d] to

‘define the status quo’” between the parties, id. at 374 (quoting

Litton Financial Printing Division v. NLRB, 501 U.S. 190, 206

(1991))). This is wrong. Where a collective-bargaining

agreement—either operative or expired—is in play, the Board

must, in considering the agreement’s scope, take into account

the possibility that the union has chosen to “negotiate for a

contractual provision limiting [its] statutory rights.” Wilkes-

Barre, 857 F.3d at 376. But where, as here, an employer seeks

release from its statutory obligations on the basis of initial

employment terms it has itself drafted—terms that, indeed,

disclaim any “inten[t] to create contractual obligations with

respect to any matters [they] cover[],” Handbook § 12.1, J.A.

157—it would be perfectly reasonable for the Board to decide

as a policy matter to construe those terms under a standard

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other than the one that would apply to the terms of a bargained-

for agreement.

Having rejected the contract-coverage standard, as it was

entitled to do, the Board went on to apply “the ‘clear and

unmistakable waiver’ standard, to which [it] adheres.”

Tramont II, 365 NLRB No. 59, at 2. Under that standard, “[a]

union may contractually relinquish a statutory bargaining right

if the relinquishment is expressed in clear and unmistakable

terms.” United Technologies Corp., 274 NLRB 504, 507

(1985). The Board, however, neglected to explain its basis for

applying this standard. Put simply, we do not see how

employment terms unilaterally imposed by an employer could

ever effect a waiver of bargaining rights by the union.

Whatever standard the Board decides should govern the

question of how far a Burns successor’s initial employment

terms displace the duty to bargain, framing that standard in

terms of waiver is far from intuitive; at the very least, it is a

choice that the Board must explain. See Point Park University

v. NLRB, 457 F.3d 42, 50 (D.C. Cir. 2006) (“Without a clear

presentation of the Board’s reasoning, it is not possible for us

to perform our assigned reviewing function . . . .”).

Tellingly, even now the Board makes no attempt to explain

how a waiver standard can sensibly apply to a Burns

successor’s unilaterally imposed initial employment terms.

Instead, it claims that Tramont forfeited any challenge to that

standard because it never “argued to the Board that[] it was

improper . . . to apply the clear-and-unmistakable-waiver

standard in the circumstances presented.” Resp’t’s Br. 26. The

record belies this claim. In its brief before the Board, Tramont

argued that “the question of ‘waiver’ normally does not come

into play with respect to subjects already addressed by the

terms and conditions governing employment.” Brief of

Respondent, Tramont Manufacturing, LLC in Support of

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Exceptions to the Record and Proceedings at 15, Tramont

Manufacturing, LLC, No. 18-CA-155608 (NLRB Feb. 24,

2016) (citing United States Postal Service, 8 F.3d at 836–37).

Tramont could hardly have made this objection more explicit.

We shall therefore remand for the Board to explain its

decision to apply the waiver standard to the question of whether

a Burns successor’s initial terms and conditions of employment

relieve the employer of any given bargaining duty. On remand,

if the Board “find[s] itself unable to support” the use of that

standard, “it is, of course, free to [employ a] different one[].”

National Ass’n of Clean Water Agencies v. EPA, 734 F.3d

1115, 1161 n.5 (D.C. Cir. 2013). To be sure, even if the Board

chooses to abandon its waiver standard in this context, it might,

in its discretion, nonetheless decide that unilaterally imposed

employment terms should be narrowly construed and that

liability remains appropriate here. Should it do so, however, it

must respond to Tramont’s argument that such an outcome

would run counter to Monterey Newspapers, Inc., 334 NLRB

1019 (2001), in which the Board held that the Act imposed no

obligation on a Burns successor to bargain over “the rate of pay

it proposed in each job offer it made to each prospective new

employee” where the employer’s initial employment terms

established that new employees would be offered pay rates

within specified bands, id. at 1019. As we have explained,

where “the resemblance between the present case” and prior

cases is sufficiently strong, “it is incumbent upon the [Board]

to explain why the line of precedent either does not apply, or

why departure from that line is warranted in this case.” Lone

Mountain Processing, Inc. v. Secretary of Labor, 709 F.3d

1161, 1164 (D.C. Cir. 2013).

B.

We can quickly dispense with Tramont’s remaining

challenges.

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First, the company argues that the ALJ’s finding that the

Union received inadequate notice of the layoffs was

unsupported by substantial evidence. When Tramont raised

this claim in its exceptions, however, the Board “disregarded”

it because the company had “presented no argument in

support.” Tramont II, 365 NLRB No. 59, at 1 n.1; see also 29

C.F.R. § 102.46(a)(1)(i)(D) (requiring a party excepting to an

ALJ’s decision to provide “authorities and argument in support

of the exceptions”); id. § 102.46(a)(1)(ii) (authorizing the

Board to “disregard[]” any exception that “fails to comply”

with this requirement). Having neglected in its opening brief

here to make more than a glancing, footnoted response to the

Board’s decision to disregard this exception, Tramont has

forfeited the chance to challenge that decision. See, e.g., CTS

Corp. v. EPA, 759 F.3d 52, 64 (D.C. Cir. 2014) (“A footnote is

no place to make a substantive legal argument on appeal;

hiding an argument there and then articulating it in only a

conclusory fashion results in forfeiture.”); Board of Regents of

the University of Washington v. EPA, 86 F.3d 1214, 1221 (D.C.

Cir. 1996) (“[W]e have generally held that issues not raised

until the reply brief are waived.”).

Next, Tramont challenges the ALJ’s finding, affirmed by

the Board, that “the Union . . . did not waive its right to request

to bargain” by waiting until the March 30 meeting to request

effects bargaining. Tramont I, 364 NLRB No. 5, at 6 (ALJ

decision); see also Tramont II, 365 NLRB No. 59, at 1

(affirming the ALJ’s factual findings). But a union is obliged

to request bargaining over an employment action only if it has

received adequate advance notice of that action, see Regal

Cinemas, Inc. v. NLRB, 317 F.3d 300, 314 (D.C. Cir. 2003)

(“[N]otice of a fait accompli is simply not the sort of timely

notice upon which the waiver defense is predicated.” (quoting

International Ladies’ Garment Workers Union, AFL-CIO v.

NLRB, 463 F.2d 907, 919 (D.C. Cir. 1972))), and as we have

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just explained, Tramont has forfeited its opportunity to

challenge the Board’s basis for rejecting its argument that the

Union received adequate notice. We therefore have no basis for

upsetting the ALJ’s supportable determination that

“[Tramont’s] failure to provide advance notice of its layoff[s]

create[d] a situation where the Union could not have given up

its bargaining rights by asking to bargain effects after the

layoffs took place.” Tramont I, 364 NLRB No. 5, at 7.

Moreover, even were we to overlook Tramont’s forfeiture,

substantial evidence supports the ALJ’s findings. See NLRB v.

Oklahoma Fixture Co., 79 F.3d 1030, 1035 (10th Cir. 1996)

(“Whether an employer has provided meaningful and timely

notice [of an action subject to bargaining] is essentially a

question of fact, and the Board’s findings in this regard are to

be accepted if supported by substantial evidence.”). Tramont,

after all, failed to notify the Union of the layoffs until after they

were implemented, and even then the Union learned of them

only indirectly through a layoff notice addressed solely to the

president of its Local, which said “nothing about other laid-off

employees.” Tramont I, 364 NLRB No. 5, at 6. Given these

undisputed facts, as well as Tramont’s delay in providing the

Union a list of laid-off employees, substantial evidence

supports the agency’s conclusions, first, that the window for

meaningful bargaining had already closed by the time the

Union received notice and, second, that the Union’s subsequent

delay in requesting bargaining therefore did not waive its

rights.

Finally, Tramont argues that the Board’s imposition of a

remedy more burdensome than the one it had imposed in its

initial, vacated order exceeded the scope of this court’s remand

order. Tramont, however, failed to make this argument to the

Board in a motion for reconsideration or otherwise. We

therefore lack jurisdiction to consider it. See 29 U.S.C. § 160(e)

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(“No objection that has not been urged before the Board . . .

shall be considered by the court . . . .”); Flying Food Group,

Inc. v. NLRB, 471 F.3d 178, 185 (D.C. Cir. 2006) (“Where . . .

a petitioner objects to a finding on an issue first raised in the

decision of the Board rather than of the ALJ, the petitioner must

file a petition for reconsideration with the Board to permit it to

correct the error (if there was one).”).

III.

For the foregoing reasons, we grant Tramont’s petition for

review in part, remanding for the Board to provide an

explanation of the legal standard it applies when determining

which subjects of mandatory bargaining are displaced by a

Burns successor’s unilaterally imposed employment terms. In

all other respects, we deny the petition for review.

So ordered.