Erie Brush & Manufacturing Corp. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 15, 2012 Decided November 27, 2012

No. 11-1337

ERIE BRUSH & MANUFACTURING CORP.,

PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT

SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 1,

INTERVENOR

Consolidated with 11-1416

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Irving M. Geslewitz argued the cause and filed the briefs

for petitioner.

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Zachary R. Henige, 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

Robert J. Englehart, Supervisory Attorney.

Leslie Ward argued the cause and filed the brief for

intervenor.

Before: SENTELLE, Chief Judge, HENDERSON and

GRIFFITH, Circuit Judges.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: Erie Brush & Manufacturing

Corporation (“Erie”) petitions for review of a National Labor

Relations Board (“NLRB” or “the Board”) decision finding

that Erie violated section 8(a)(5) and (1) of the National Labor

Relations Act (“the Act”), 29 U.S.C. § 158(a)(1), (5). See

Erie Brush & Manufacturing Corp. and Service Employees

International Union, Local 1, 357 N.L.R.B. No. 46, 2011 WL

3860605 (Aug. 9, 2011) (“Board Decision”). NLRB cross-

petitions for enforcement of its order. Erie challenges the

Board’s finding of unlawful refusal to bargain, arguing that

the parties were at a bargaining impasse. Alternatively, Erie

argues that even if we uphold the Board’s finding of an unfair

labor practice, the bargaining remedy imposed exceeded the

Board’s authority. Because we conclude that substantial

evidence does not support the Board’s decision, we grant the

petition for review and vacate the Board’s decision and order.

We need not decide the challenge to the Board’s remedy.

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I. BACKGROUND

Erie manufactures washing and polishing brushes at its

facility in Chicago, Illinois. The Seventh Circuit enforced a

previous NLRB order requiring Erie to recognize and bargain

with the Service Employees International Union, Local 1

(“the Union”) for at least one year. NLRB v. Erie Brush &

Manufacturing Corp., 406 F.3d 795 (7th Cir. 2005). Erie

began negotiations with the Union on June 28, 2005. At the

parties’ first meeting, the Union’s chief negotiator, Charles

Bridgemon, asked that the parties discuss noneconomic issues

before economic ones, and Erie’s chief negotiator, Irving M.

Geslewitz, agreed. Between June 28, 2005 and March 31,

2006, the parties met on eight occasions and reached

agreement on all noneconomic issues except two: union

security and arbitration of grievances. The Union insisted on

including union security and arbitration clauses in the

contract. Erie was equally committed to an open shop and

opposed to arbitration. During the meetings, Bridgemon

repeatedly told Geslewitz that the Union had no room to

compromise on union security or arbitration, calling those

issues “make or break on [the] whole contract” and saying

that the Union “can’t work on these things” and “there

wouldn’t be a contract without a union security clause.”

Geslewitz was just as adamant, refusing to agree to a contract

that contained union security or arbitration provisions.

At the March 31 meeting, Bridgemon repeated a previous

offer to modify his position on arbitration if Geslewitz would

agree to change the contract’s no-strike provision, but

Geslewitz again declined the offer. Bridgemon, according to

his own testimony, told Geslewitz that he felt the parties were

at an impasse on union security and arbitration, and Geslewitz

agreed. Bridgemon suggested mediation, and Geslewitz said

he would consult with Erie’s president on the prospect of

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mediation even though he saw no potential middle ground on

those two issues.

The parties next corresponded in a series of emails,

beginning on April 5, 2006, when Geslewitz wrote to

Bridgemon that Erie would not agree to mediation because

neither party was willing to compromise on union security or

arbitration, rendering mediation futile. Over a month later, on

May 10, Bridgemon responded and suggested they negotiate

economic issues and come back to the noneconomic ones. On

May 26, Geslewitz asked whether the Union’s positions on

union security or arbitration had changed, because otherwise

further negotiations would be pointless. Bridgemon’s May 31

response stated that he was “willing to continue to discuss the

union security and arbitration issues with the local,” and he

again requested a meeting. Geslewitz’s June 1 email asked

whether Bridgemon had authorization to change his position

and if so, whether he had a proposal to offer. A day later,

Bridgemon said he had “some give on the arbitration issue”

but not on union security, and declined to provide a proposal.

Geslewitz responded that it was still pointless to meet unless

union security was on the table, and that he wanted more

information in the form of a proposal.

Nine days later, on June 16, the Union threatened to file

an unfair labor practice charge, and shortly thereafter, the

parties scheduled a meeting for July 24. But on July 5, an

employee who was a member of the bargaining unit delivered

to Erie’s president a handwritten document signed by 18 of 21

bargaining unit employees. The document stated (in Spanish)

that the employees of Erie (most of whom have Spanish

surnames) did not want to be represented by the Union.

Based upon this petition, Geslewitz informed Bridgemon that

Erie was withdrawing recognition and canceling the July 24

meeting.

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After the Union brought unfair labor practice charges, the

Board’s General Counsel issued a complaint. An NLRB

Administrative Law Judge (“ALJ”) found that Erie had

violated section 8(a)(5) and (1) by refusing to bargain with the

Union between May 10 and June 21, 2006. Board Decision at

12 (ALJ Op.). The ALJ held that this refusal to bargain

tainted the employees’ decertification petition, so that Erie’s

withdrawal of recognition of the Union also violated section

8(a)(5) and (1). Id.

Erie filed exceptions to the ALJ’s findings. A divided

Board affirmed the ALJ’s findings and order with only minor

modifications. See id. at 1–5 (Board Op.). Member Hayes

dissented from the Board’s decision, stating that because the

parties were at a bona fide impasse on union security and

arbitration, he would reverse the ALJ’s finding of unlawful

refusal to bargain. Id. at 9 (Dissenting Op.).

As a remedy, the Board ordered Erie to cease and desist

from refusing to bargain. Id. at 4–5 (Board Op.), 13 (ALJ

Op.). The Board ordered Erie to recognize and bargain with

the Union as the exclusive bargaining representative of Erie

employees for at least six months. Id. Finally, the Board

required Erie to physically post and electronically distribute a

notice announcing that Erie would no longer engage in

violations of the Act. Id.

Erie petitions this court for review, arguing that the

Board’s finding of unlawful refusal to bargain was not

supported by substantial evidence in the record. In addition,

Erie challenges the propriety of the Board’s affirmative

bargaining order.

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II. DISCUSSION

Section 8(a)(5) of the Act prohibits an employer from

“refus[ing] to bargain collectively with the representatives of

his employees.” 29 U.S.C. § 158(a)(5). The obligation to

“bargain collectively” requires “the employer and the

representative of the employees to meet at reasonable times

and confer in good faith with respect to . . . the negotiation of

an agreement,” but it “does not compel either party to agree to

a proposal or require the making of a concession.” Id. §

158(d). The bargaining obligation is suspended temporarily

when the parties reach a lawful impasse. Serramonte

Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232 (D.C. Cir. 1996).

A lawful impasse “occurs when ‘good faith negotiations have

exhausted the prospects of concluding an agreement.’”

TruServ Corp. v. NLRB, 254 F.3d 1105, 1114 (D.C. Cir.

2001) (quoting Taft Broadcasting Co., 163 NLRB 475, 478

(1967)). In other words, impasse exists if the parties “are

warranted in assuming that further bargaining would be

futile.” Id. (quoting Wycoff Steel, Inc., 303 NLRB 517, 523

(1991)) (internal quotation mark omitted). A violation of

section 8(a)(5) results in a derivative violation of section

8(a)(1), which makes it unlawful for an employer “to interfere

with . . . employees in the exercise of” their section 7 rights.

29 U.S.C. § 158(a)(1); see id. § 157; Wayneview Care Center

v. NLRB, 664 F.3d 341, 347 n.1 (D.C. Cir. 2011).

This court must affirm Board findings if they are

“supported by substantial evidence on the record considered

as a whole.” 29 U.S.C. § 160(e). Though our review of

NLRB decisions is “highly deferential,” Parsippany Hotel

Management Co. v. NLRB, 99 F.3d 413, 419 (D.C. Cir. 1996),

we will not “merely rubber-stamp NLRB decisions.” Avecor,

Inc. v. NLRB, 931 F.2d 924, 928 (D.C. Cir. 1991). Indeed, we

bear the “responsibility to examine carefully both the Board’s

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findings and its reasoning.” Id. (quoting Peoples Gas System,

Inc. v. NLRB, 629 F.2d 35, 42 (D.C. Cir. 1980)).

With this responsibility in mind, we turn our attention to

the Board’s finding that Erie unlawfully refused to bargain

with the Union. Erie objects to this finding, arguing that the

parties were at a bargaining impasse on March 31, 2006, after

their final in-person meeting. After review of the record, we

conclude that the record evidence not only does not support

the Board’s finding, but uniformly supports Erie’s position.

Impasse on a single critical issue can create an impasse

on the entire agreement. See CalMat Co., 331 NLRB 1084,

1097 (2000). A party asserting impasse based on a single

issue must show that: first, a good-faith bargaining impasse

actually existed; second, the single issue involved was

critical; and third, “the impasse on this critical issue led to a

breakdown in the overall negotiations.” Id. The Board does

not dispute that Erie established the second CalMat factor:

union security was a critical issue. See Board Decision at 2;

Resp’t Br. at 26.

On the first factor, the Board found that Erie failed to

establish the existence of a good-faith bargaining impasse

before May 10. The Board explained that Bridgemon’s

suggestion of mediation on March 31 “show[ed] that he did

not believe that further bargaining over either issue would be

futile.” Board Decision at 2. The Board took Bridgemon’s

promise to continue discussing the issues with the Union as

evidence that the Union’s positions on union security and

arbitration were “gradually softening.” Id. at 3.

The Board’s finding of no impasse on union security or

arbitration, however, is unsupported by substantial evidence.

Considerations bearing on the existence of an impasse include

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“the bargaining history, the good faith of the parties in

negotiations, the length of the negotiations, the importance of

the issue or issues as to which there is disagreement, [and] the

contemporaneous understanding of the parties as to the state

of negotiations.” TruServ, 254 F.3d at 1114 (quoting Taft,

163 NLRB at 478) (internal quotation marks omitted). In this

case, the evidence overwhelmingly points to the existence of

an impasse on March 31. The parties had negotiated over a

period of ten months, and had agreed to discuss noneconomic

issues before moving on to economic ones. At no point

during the ten month negotiation did either party propose a

compromise on union security or arbitration that was

acceptable to the other party. The Board did not rely on any

bad faith by the parties, see Resp’t Br. at 26 n.8, and it did not

question the importance of union security or arbitration. Both

parties understood bargaining to be at an impasse on March

31: Bridgemon, the Union’s bargaining representative,

explicitly stated that he viewed the negotiations as being at an

impasse, and Geslewitz, the company’s representative,

agreed.

The Board pointed to two pieces of evidence in its

finding of no impasse. First, the Board took Bridgemon’s

suggestion of mediation to mean that Bridgemon considered

further bargaining on union security and arbitration

potentially productive. But we have held that “a vague

request by one party for additional meetings, if

unaccompanied by an indication of the areas in which that

party foresees future concessions, is . . . insufficient to defeat

an impasse where the other party has clearly announced that

its position is final.” TruServ, 254 F.3d at 1117. On March

31, Bridgemon offered no possibility of future concessions on

union security or arbitration. In fact, quite to the contrary:

Bridgemon explicitly stated that the parties were “at impasse”

on union security and arbitration, told Geslewitz that he had

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no room to compromise on those issues, and suggested an

arbitration proposal that Erie had already repeatedly rejected.

Even assuming the Union’s recycling of an already-declined

arbitration proposal constituted a “softening” of its position

on arbitration, the Union had not budged on union security as

of March 31. We agree with the Board’s dissenting member

that the “mere invocation” of mediation does not “somehow

magically ward[] off a deadlock.” Board Decision at 8

(Dissenting Op.).

Second, the Board relied upon Bridgemon’s statement

that he would continue discussing the issues with the Union.

Id. at 3 (Board Op.). But Bridgemon made no such statement

on March 31. Bridgemon made a promise to continue

discussing the issues with the Union on March 3, but on

March 31, he made no such promise, and stated that he

considered the negotiations at an impasse. Bridgemon made a

similar promise on May 31, but we have recently reiterated

that the Board cannot rely on a party’s “post-impasse

conduct” to find no impasse. Laurel Bay Health &

Rehabilitation Center v. NLRB, 666 F.3d 1365, 1375 (D.C.

Cir. 2012). Even if Bridgemon had made a contemporaneous

promise, a negotiating agent’s bare promise to continue

discussing with his principal the topics of negotiations does

not imply any moderation in the party’s position. See id.

(finding impasse where the union representative’s statements

“did not actually commit the [u]nion to a new position or

contain any specific proposals” (quoting Serramonte, 86 F.3d

at 233) (internal quotation marks and alterations omitted)).

Before the court, counsel for the NLRB attempts to

distinguish TruServ, in which we found impasse even though

the union disagreed that the parties were at impasse, TruServ,

254 F.3d at 1117–18, on the ground that “the Union here did

more than simply say the parties weren’t at impasse.” Resp’t

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Br. at 23. NLRB’s position is undermined by the

inconvenient fact that the Union here not only did not say that

the parties “weren’t at impasse” on March 31, its

representative said — out-loud and in-person — that they

were “at impasse.” This fact makes it even more obvious than

it was in TruServ that the parties were at impasse. Thus, the

Board’s finding regarding the first CalMat factor, that no

good faith impasse existed, is not supported by substantial

evidence in the record, for the evidence “practically shouted

impasse” on March 31. Laurel Bay, 666 F.3d at 1375 n.13.

Turning our attention to the third CalMat factor, whether

the critical issue impasse led to an overall breakdown in

negotiations, the Board found that even if the parties had

reached a good faith impasse on union security or arbitration,

Erie failed to show that the impasse led to a breakdown in

negotiations. Board Decision at 4. Once again, substantial

evidence does not support this finding. Each party made clear

throughout the negotiations leading up to March 31 that it

would not sign a contract that adopted the other party’s

position on union security. Both parties considered union

security “make or break” on the entire contract. As in

CalMat, the critical issue “pervaded the negotiations” and the

parties’ “positions never changed.” 331 NLRB at 1098. The

Board’s claim that one of the parties would decide to change

its position on union security “was not based on the record

evidence; rather, the Board relied on its intuitive belief that,

upon further bargaining, each side would have made

additional concessions.” TruServ, 254 F.3d at 1116. Such

rank speculation cannot form the basis of a sound

administrative finding, for we have emphasized that “each

party, not the Board, determines at what point it ceases to be

willing to compromise.” Id. “You never know” is no

substitute for substantial evidence.

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At oral argument, the Union pressed the position that

impasse cannot be found if the parties have not negotiated

over economic issues. But the Board expressly refused to rest

its decision on that proposition. Board Decision at 4 n.8.

Though we seriously doubt the correctness of the Union’s

position, we need not reach that issue. “The courts may not

accept appellate counsel’s post hoc rationalization for agency

action; Chenery requires that an agency’s discretionary order

be upheld, if at all, on the same basis articulated in the order

by the agency itself.” Burlington Truck Lines, Inc. v. United

States, 371 U.S. 156, 168–69 (1962) (citing SEC v. Chenery,

332 U.S. 194, 196 (1947)); see also Jochims v. NLRB, 480

F.3d 1161, 1169 (D.C. Cir. 2007).

All record evidence supports the proposition that the

parties’ diametrically opposed positions on union security

“presented . . . an insurmountable obstacle to an agreement.”

Richmond Electrical Services, Inc., 348 NLRB 1001, 1003

(2006). Because “the parties’ failure to agree on this issue

destroyed any opportunity for reaching a . . . collective-

bargaining agreement,” CalMat, 331 NLRB at 1098, the

impasse on union security led to a breakdown in overall

negotiations. Therefore, the record evidence clearly

demonstrates that Erie met its burden of showing that the

parties were at an impasse on the critical issue of union

security on March 31, 2006.

The Board found that “even if the parties were at a

momentary impasse . . . , it was broken well before [Erie]

finally agreed in late June to resume bargaining.” Board

Decision at 3 n.7. This finding is not supported by substantial

evidence. An impasse is considered broken only if “the party

asserting that the impasse has been broken” points to

“substantial evidence in the record that establishes changed

circumstances sufficient to suggest that future bargaining

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would be fruitful.” Serramonte, 86 F.3d at 233. According to

the Board, Bridgemon’s assurance on May 31 that he would

continue discussing union security and arbitration with the

Union showed changed circumstances sufficient to break the

impasse. But this communication is entirely inadequate to

break the impasse. It did not “commit[] the Union to a new

position or contain[] any specific proposals.” Id. (“[A]

party’s ‘bare assertions of flexibility on open issues and its

generalized promises of new proposals’” do not represent

“‘any change, much less a substantial change’ in that party’s

negotiating position.” (quoting Civic Motor Inns, 300 NLRB

774, 776 (1990))). A negotiator’s promise to do that which he

has already and always done — discuss the bargaining issues

with his principal — offers nothing more than “a handful of

air,” id., and demonstrates no change in circumstances.

The Board also relied upon Bridgemon’s June 2

statement that he had room to move on arbitration to show

changed circumstances. First, this communication regarding

arbitration self-evidently fails to show changed circumstances

regarding the parties’ impasse on the critical issue of union

security. In fact, Bridgemon’s June 2 email stated that he did

not “have any give” on union security. Second, Bridgemon’s

communication did not actually demonstrate changed

circumstances on any impasse over arbitration. In the June 2

email, Bridgemon wrote: “I do have some give on the

arbitration issue . . . [, but] I don’t have a counter[-proposal]

at this point.” This statement constitutes a “bare assertion[] of

flexibility” devoid of any specific proposals and is insufficient

to break a bargaining impasse. Id. In short, the Board’s

finding that the Union established changed circumstances

sufficient to break any impasse is unsupported by substantial

evidence in the record.

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Because Erie and the Union were at a lawful impasse on

at least the critical issue of union security from March 31

through the end of the parties’ relevant communications, Erie

was relieved of the duty to bargain during that time period.

See id. at 232 (“[A] good-faith impasse in negotiations

temporarily suspends the duty to bargain.”). Thus, Erie did

not unlawfully refuse to bargain. The Board’s decision

finding that Erie violated section 8(a)(5) and (1) was not

supported by substantial evidence in the record.

Erie argues alternatively that the Board erred in imposing

a bargaining order as a remedy and reminds us that we have

often told the Board that such an order is an extraordinary

remedy that may not be imposed in run-of-the-mill cases. See

Vincent Industrial Plastics, Inc. v. NLRB, 209 F.3d 727, 738

(D.C. Cir. 2000). While this proposition is true enough, we

have no occasion to examine the question in the present case,

as our decision on the merits issue of impasse moots any issue

as to the propriety of remedy. Nor need we discuss the

Board’s cross-petition for enforcement of the order since our

merits decision renders that petition moot.

III. CONCLUSION

For the foregoing reasons, we grant the petition for

review, vacate the Board’s decision and order, and deny the

Board’s cross-petition for enforcement.

So ordered.