Dubuque Packing Co.

National Labor Relations Board - Board Decisions

Jun 14, 1991

303 N.L.R.B. 386 (N.L.R.B. 1991)

DUBUQUE PACKING CO.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
303 NLRB No. 66
Dubuque Packing Company, Inc. and United Food and Commercial Workers
International Union, AFL-CIO, Local No. 150A. Cases 33-CA-5524 and 33-
CA-5588
JUNE 14, 1991
SUPPLEMENTAL DECISION AND ORDER
BY CHAIRMAN STEPHENS AND MEMBERS CRACRAFT, DEVANEY, OVIATT, AND
RAUDABAUGH
This case has been characterized as ``present[ing] hard questions--
indeed, some of the most polarizing questions in contemporary labor
law.'' Food & Commercial Workers Local 150-A v. NLRB, 880 F.2d 1422,
1439 (D.C. Cir. 1989). The most difficult issue before us is the general
one of what standard to apply in determining whether an employer's
decision to relocate bargaining unit work is a mandatory subject of
bargaining. The more specific question presented is whether the
Respondent violated Section 8(a)(5) and (1) of the Act by failing to
bargain in good faith with the Union over the Respondent's decision to
relocate its hog kill and cut operations from its home plant in Dubuque,
Iowa, to a new plant in Rochelle, Illinois. For the reasons set forth
below, we have decided to adopt a new test for determining whether
bargaining is required over a relocation decision, to overrule our
original Decision and Order in this case (287 NLRB 499 (1987)), and to
find that the Respondent violated the Act.
I. PROCEDURAL HISTORY
On December 16, 1987, the Board issued its initial decision in this
proceeding, adopting the judge's decision and finding that ``under any
of the views expressed in Otis Elevator Co., 269 NLRB 891 (1984), the
Respondent was not obligated to bargain with the Union over its decision
to relocate unit work from its Dubuque plant to its Rochelle plant.''
287 NLRB 499 fn. 1. Accordingly, the Board dismissed the complaint in
its entirety.
The Union filed a petition for review with the United States Court
of Appeals for the District of Columbia Circuit. On August 4, 1989, the
court remanded the case to the Board for further consideration. 880 F.2d
1422.
The court stated that the judge's decision, which the Board adopted,
did not provide sufficient reasoning linking the factual findings to the
dispositive legal conclusions. In addition, the court found confusing
the Board's statement that the judge's holding was correct ``under any
of the views'' expressed in Otis Elevator. Most significantly, the court
``urge[d] the Board to look seriously at the present case on remand and
to attempt to articulate a majority-supported statement of the rule that
the Board will be applying now and in the future in determining whether
a particular decision is subject to mandatory bargaining or not.'' 880
F.2d at 1436-1437. Finally, the court noted that certain similar cases
reaching a different result had not been addressed, nor had the Board
discussed the Union's argument that even if there was no duty to bargain
about the relocation decision itself, a bargaining obligation did arise
when the Respondent sought midterm modification of contractual
provisions dealing with mandatory bargaining subjects. Accordingly, the
court remanded the case to the Board.
On January 3, 1990, the Board advised the parties that it accepted
the remand and that they might submit statements of position. On March
1
26, 1990, the Board scheduled oral argument in this case because the
court's remand presented important issues in the administration of the
Act. On September 6, 1990, the Respondent, the General Counsel, the
Union, the American Federation of Labor and Congress of Industrial
Organizations, the Chamber of Commerce of the United States of America,
and the Council on Labor Law Equality presented oral argument before the
Board. The parties and the amici curiae have filed statements of
position and briefs.\1\
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\1\The American Federation of Labor and Congress of Industrial
Organizations, the Chamber of Commerce of the United States of America,
and the Council on Labor Law Equality appeared as amici curiae.
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II. FACTUAL BACKGROUND
The facts in this case have been exhaustively detailed by the
administrative law judge in the underlying Board decision and are
largely undisputed. 287 NLRB at 500-534. We continue to rely on the
judge's factual findings and do not repeat here in great detail what has
already been set forth in his decision. Further amplification of the
facts will be saved for the analysis section of this decision. A brief
overview follows.
The Respondent has been engaged in the business of meat
slaughtering, processing, and packing at several facilities nationwide,
including a facility in Dubuque, Iowa. Employees at the Dubuque facility
were represented by the United Food and Commercial Workers International
Union, AFL-CIO, Local No. 150A (the Union) for many years until October
15, l982, when the plant closed. Prior to the closing approximately 2000
employees worked at the Dubuque plant, 1900 of whom were represented by
the Union. The Respondent and the Union were parties to numerous
successive collective-bargaining agreements. The parties' last two
collective-bargaining agreements, which were in effect during periods
material herein, were effective from September 1, 1976, to September 1,
1979, and from September 1, 1979, to September 1, 1982. The latter
agreement was extended to September 1, 1983.
Beginning in 1977, the Respondent's Dubuque plant began posting a
loss. Losses at the plant became increasingly severe in the late 1970s
and early 1980s. As a result of the waning profitability of its
operations in Dubuque, the Respondent began encountering financial
problems with its lenders and approached the Union about obtaining
relief from its collective-bargaining agreements in order to continue
operations. The events which gave rise to the instant proceeding
occurred in the context of the Respondent's requests for midterm
concessions and centered on the Respondent's actions with respect to the
hog kill and cut departments.
In l978, the union membership voted to accept an increase in
incentive standards in order to help alleviate the Respondent's
financial situation. In 1979 and l980, the Respondent's financial
problems continued to mount. In June 1980, the Respondent notified the
Union of its decision to close the beef kill and related departments
effective December 12, 1980.\2\
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\2\Thereafter, in response to the Union's request for
reconsideration and the employees' increased productivity, the
Respondent announced that the beef kill department would remain open on
a month-to-month basis. The beef kill actually continued at Dubuque
until the plant itself closed in October 1982.
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In 1980, the hog kill and cut departments also became the focus of
discussions between the parties. The Respondent argued that in order to
remain competitive, top productivity per man hour would have to be
obtained. In August 1980, the parties agreed to modify the contract to
eliminate all incentive pay and require that employees continue to meet
the production standards they had been achieving. In return, the
Respondent agreed that it would not seek further concessions for the
remainder of the contract's term. This agreement saved the Respondent
2
approximately $5 million annually.
In December 1980, the Respondent's request for a $5 million loan for
modernization of the Dubuque plant was rejected. In January 1981, the
lead bank called the Respondent's $10 million loan and advised of its
intention to terminate the Respondent's $45 million line of credit. In
response, the Respondent instituted several cost-savings measures and
sought alternative sources of credit. In March 1981, the Respondent
successfully repaid the $10 million loan.
Also in March 1981, the Respondent pressed the Union for further
concessions, specifically an increase in the hog kill ``chain speed''
(the number of animals slaughtered per hour). When the Union rejected
this proposal, the Respondent announced on March 31, 1981, that the hog
kill and cut departments would be closed in 6 months. The Union did not
request bargaining over the partial closure decision.
In early June 1981, the Respondent proposed that if the employees
agreed by July 1 to a wage freeze,\3\ the hog kill and cut operations
would continue for the balance of the contract term. Later, the
Respondent added that the employees could also participate in a profit-
sharing plan if they would agree to a wage freeze. These proposals were
rejected by the union membership on June 9, 1981.
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\3\There were to be four wage increases prior to the September 1,
1982 contract expiration date.
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On June 10, 1981, after learning of the union membership's rejection
of the wage freeze/profit-sharing plan, the Respondent issued a press
release confirming that the hog kill and cut departments would be
discontinued and for the first time announcing that the Respondent had
an alternate plan to relocate these operations. Until the time of this
announcement, the Respondent had spoken only in terms of closing these
operations, not relocating them.
On June 16, 1981, the Respondent successfully negotiated a new $50
million line of credit. However, the lenders could withdraw from this
arrangement at will.
On June 23, 1981, in response to the Respondent's announcement that
a decision to relocate had been made, the Union requested extensive
corporatewide information substantiating the need for concessions. The
Union also scheduled another vote on the wage freeze/profit-sharing plan
on June 28, 1981.
On June 24, 1981, the Respondent advised the union membership that a
vote for the Respondent's wage freeze/profit-sharing plan would save the
hog kill and cut departments. Nevertheless, on June 28, 1981, the
membership voted to reject the Respondent's proposals.
With respect to the Union's information request, the Respondent
objected on the grounds of relevancy and confidentiality. The
Respondent's letter in response to the Union's request stated: ``Your
request for this information appears to be related to a desire to
negotiate with the Company as to its decision to close part of its
operations.'' The Respondent denied that it had any obligation to
bargain over what it characterized as a decision to close part of its
business.
On July 1, 1981, the Respondent notified the Union that the decision
to close the hog kill and cut departments was irrevocable.
On July 10 and 11, 1981, the Respondent announced that it had
purchased the Rochelle, Illinois plant as a replacement for the hog kill
and cut departments in Dubuque. The Rochelle plant opened on October 1,
1981, and the hog kill and cut departments in Dubuque closed on October
3, 1981.
Negotiations over the potential relocation of processing operations
were conducted from July through October l981. During these
negotiations, when the Union requested bargaining over the hog kill and
cut departments, the Respondent responded that the hog kill and cut
departments were closed and there was no duty to bargain over the
closure.
In early 1982, the Respondent lost its financing. On October 15,
1982, the Dubuque and Rochelle plants were closed and sold.
3
III. ANALYSIS
As the court of appeals properly reminded us, it is our
responsibility to clarify and identify the standards that guide our
decisions. The court urged us on remand to attempt to articulate a
single majority-supported statement of the standard for determining
whether a particular decision is a mandatory subject of bargaining. 880
F.2d at 1436-1437. In response to that direction on remand, we have
formulated a new single standard with respect to decisions to relocate.
In formulating that standard we have taken into account principles set
out in the two most relevant Supreme Court decisions--First National
Maintenance Corp. v. NLRB, 452 U.S. 666 (1981), and Fibreboard Corp. v.
NLRB, 379 U.S. 203 (1964)--and criticisms of the three tests for certain
management decisions (including relocations) which were embraced by
different Board Members in Otis Elevator Co., 269 NLRB 891 (1984). As
explained below, Otis Elevator was itself issued in response to First
National Maintenance. Before setting forth our new standard, we will
review the major Supreme Court and Board precedent in this area.
A. SUPREME COURT PRECEDENT
In First National Maintenance Corp. v. NLRB, supra, the issue was
whether the employer's decision to close part of its business was a
mandatory subject of bargaining.\4\ In addressing this question, the
Supreme Court set forth several relevant principles.
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\4\In First National Maintenance, the employer provided maintenance
and housekeeping services for commercial establishments including a
nursing home. Under the service contract, the home reimbursed the
employer for its labor costs and paid it a fixed management fee. The
employer became financially dissatisfied with the arrangement but was
unable to secure an increase in the management fee. Consequently, the
employer terminated its contract with the home and discharged its
employees working there without bargaining with their union over the
decision to close a part of the business.
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Relying heavily on Justice Stewart's concurrence in Fibreboard Corp.
v. NLRB, supra, the Court divided management decisions into three
categories. First, the Court found that some management decisions, such
as choice of advertising, product type and design, and financing
arrangements, have only an indirect and attenuated impact on the
employment relationship and thus there is no attendant obligation to
bargain as to these decisions. 452 U.S. at 676-677. Second, the Court
found that other management decisions, such as the order of succession
of layoffs and recalls, production quotas, and work rules, are almost
exclusively an aspect of the relationship between employer and employees
and as to these there is an obligation to bargain. Id. at 677. Third,
the Court found that the partial closure decision at issue in First
National Maintenance presented a third type of management decision, one
that had a direct impact on employment, because jobs were eliminated by
the termination of the employer's contract with the nursing home, but
which had as its focus only the economic profitability of the contract
with the home, which the Court found, under the facts before it, to be a
concern wholly apart from the employment relationship. The Court stated
that the employer's decision to terminate its contract with the home
involved a change in the scope and direction of the enterprise and was
akin to a decision whether to be in business at all, ``not in [itself]
primarily about conditions of employment, though the effect of the
decision may be necessarily to terminate employment.''\5\ However, the
Court acknowledged that the employer's decision to terminate its
contract with the nursing home also touched on a matter of central and
pressing concern to the union and its member employees: the possibility
of continued employment and the retention of the employees' very jobs.
Id.
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\5\452 U.S. at 677, quoting from Fibreboard, 379 U.S. at 223
(Stewart, J., concurring).
4
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The Court found the concept of mandatory bargaining premised on the
belief that collective discussions backed by the parties' economic
weapons would result in decisions that were better for both management
and labor and for society as a whole. Id. at 678. However, the Court
also stated that this would be true only if the subject proposed for
discussion was amenable to resolution through the bargaining process.
The Court continued as follows:
Management must be free from the constraints of the bargaining
process to the extent essential for the running of a profitable
business. It also must have some degree of certainty beforehand
as to when it may proceed to reach decisions without fear of
later evaluations labeling its conduct an unfair labor
practice.\6\
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\6\Id. at 678-679 (footnote omitted).
Accordingly, the Court formulated the following balancing test to take
account of both the subject matter's amenability to the bargaining
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process and the burdens that bargaining would place upon management:
[I]n view of an employer's need for unencum- bered
decisionmaking, bargaining over management decisions that have a
substantial impact on the continued availability of employment
should be required only if the benefit, for labor-management
relations and the collective-bargaining process, outweighs the
burden placed on the conduct of the business.\7\
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\7\Id. at 679.
The Court found that it had implicitly engaged in such a balancing
of benefits and burdens in Fibreboard, supra, when it held that an
employer was required to bargain over a decision to subcontract
maintenance work previously performed by unit employees. The Court noted
that it had emphasized in Fibreboard that the basis for the
subcontracting decision was a desire to reduce labor costs, a matter
which the Court in Fibreboard found to be ``peculiarly suitable for
resolution within the collective bargaining framework.'' 379 U.S. at
213-214. Requiring bargaining over the subcontracting decision would not
place a significant burden on the business because that decision did not
alter the employer's basic operation, no capital investment was
contemplated, and the employer merely replaced current employees with
those of an independent contractor to do the same work under similar
conditions of employment. Id. at 213.
With that in mind, the Court in First National Maintenance turned to
the specific issue before it--whether an employer's economically
motivated decision to shut down part of its business was a mandatory
subject of bargaining. The Court held that it was not. More
specifically, the Court held that ``the harm likely to be done to an
employer's need to operate freely in deciding whether to shut down part
of its business purely for economic reasons outweighs the incremental
benefit that might be gained through the union's participation in making
the decision . . . .'' Id. at 686.
However, the Court qualified its holding in two important respects.
First, in footnote 22 the Court stated: ``In this opinion we of course
intimate no view as to other types of management decisions, such as
plant relocations, sales, other kinds of subcontracting, automation,
etc., which are to be considered on their particular facts.'' Id.
(Emphasis added.) Second, in the final section of its opinion, the Court
returned to the specific facts of the case ``[i]n order to illustrate
the limits of our holding.'' Id. at 687. In this connection, the Court
noted, inter alia, that the employer had no intention to replace the
discharged employees or ``to move that operation elsewhere.'' Id. In
addition, the employer's decision was based on a factor over which the
union had ``no control or authority'' (the size of the management fee
5
the nursing home was willing to pay). Id. Further, the employer's
decision to cease operations at the nursing home ``represented a
significant change in petitioner's operations, a change not unlike
opening a new line of business or going out of business entirely.'' Id.
at 688.
B. BOARD PRECEDENT--THE OTIS ELEVATOR TESTS
In Otis Elevator Co., 269 NLRB 891 (1984), the Board applied First
National Maintenance to an employer decision to discontinue portions of
its research and development activities and consolidate the remainder in
a new corporatewide facility. All four participating Board Members
agreed that the employer's decision was not a mandatory subject of
bargaining, but there was no majority rationale.
The Board plurality of Chairman Dotson and Member Hunter set forth
the following test for determining whether a decision is a mandatory
subject of bargaining:
Despite the evident effect on employees, the critical factor to
a determination whether the decision is subject to mandatory
bargaining is the essence of the decision itself, i.e., whether
it turns upon a change in the nature or direction of the
business, or turns upon labor costs; not its effect on employees
nor a union's ability to offer alternatives. The decision at
issue here clearly turned upon a fundamental change in the
nature and direction of the business, and thus was not amenable
to bargaining.
269 NLRB at 892 (emphasis in original). According to the plurality, the
characterization of the decision was not important. Thus, the plurality
stated that management decisions would be included or excluded from the
scope of mandatory bargaining depending on whether they turned on labor
costs or on a fundamental change in the scope and direction of the
enterprise, regardless of whether they are characterized as, for
example, ``subcontracting,'' ``reorganization,'' ``consolidation,'' or
``relocation.'' Id. at 893.
In her concurring opinion, Member Dennis established a two-step test
for use in determining whether a certain management decision is a
mandatory subject of bargaining: ``[T]he General Counsel must prove (1)
that a factor over which the union has control was a significant
consideration in the employer's decision, and (2) that the benefit for
the collective-bargaining process outweighs the burden on the
business.'' Id. at 897. The burden elements to be considered in applying
the second part of the test include: extent of capital commitment;
extent of changes in operations; and the need for speed, flexibility, or
confidentiality. Id.
In his separate opinion, Member Zimmerman found that bargaining
should be required when the decision is ``amenable to resolution through
collective bargaining.'' Id. at 900. Under Member Zimmerman's test, a
duty to bargain could arise even if ``the employer's decision is related
to overall enterprise costs not limited specifically to labor costs''
because his broad definition of ``amenability'' encompassed situations
where ``union concessions may substantially mitigate the concerns
underlying the employer's decision, thereby convincing the employer to
rescind its decision.'' Id. at 901.
As the court of appeals correctly pointed out, each of these
opinions ``retains vitality'' to the present day. 880 F.2d at 1432. In
the 7 years since Otis Elevator issued, no single opinion has commanded
the support of the majority of the Board. Instead, the Board has decided
subsequent cases on the ground that the result reached would be the same
``under any of the views expressed in Otis Elevator.'' E.g., FMC Corp.,
290 NLRB 483, 485 (1988).
C. DECISIONS TO RELOCATE UNIT WORK: THE NEW TEST
Although the court of appeals concluded that all three Otis Elevator
tests are reasonable, the court was critical of the under-any-view
6
approach the Board has used in later cases. We agree with the court that
the time has come to clarify this area of the law. Because the Otis
Elevator opinions set forth ``divergent views,'' 880 F.2d at 1432, the
fact that the Board has continued to rely on all three of them has no
doubt led to uncertainty in the labor-management community as to how a
specific decision will be analyzed and whether an obligation to bargain
will be found. In accordance with the terms of the court's remand, we
have exercised our discretion and, for the following reasons, have
decided to reject each of the Otis Elevator tests in favor of the new
standard described below.\8\
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\8\Accordingly, to the extent Otis Elevator is inconsistent with
this decision, it is overruled.
The standard we announce today addresses only decisions to relocate
unit work. We express no view as to what standard will be used in
analyzing the other management decisions referred to in fn. 22 of First
National Maintenance.
In accordance with our usual practice, we shall apply our new
standard not only ``to the case in which the issue arises,'' but also
``to all pending cases in whatever stage.'' Deluxe Metal Furniture Co.,
121 NLRB 995, 1006-1007 (1958).
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In addressing the question of whether a decision to relocate unit
work is a mandatory subject of bargaining giving rise to an obligation
to bargain, we are guided by the principles set forth in First National
Maintenance. Initially, we note that the decision to relocate falls
within the third category of management decisions described in First
National Maintenance (decisions which have a direct impact on employment
but have as their focus the economic profitability of the employing
enterprise). Such decisions are neither clearly covered by nor clearly
excluded from Section 8(d)'s ``terms and conditions of employment'' over
which Congress has mandated bargaining. It is therefore the Board's task
to determine whether a relocation decision is a mandatory subject of
bargaining or whether it should be considered as within the ambit of an
employer's ``retained freedom to manage its affairs unrelated to
employment.'' First National Maintenance, 452 U.S. at 677.
In performing that task, we recognize that our discretion is
considerable. Thus, the Supreme Court ``intimate[d] no view'' as to
relocation decisions, 452 U.S. at 686 fn. 22, and the court of appeals
stated that ``outside the context of partial closings the Supreme Court
left the Board the discretion to strike a somewhat different balance . .
. .'' 880 F.2d at 1432-1433 fn. 6.
In our experience, the circumstances surrounding decisions to
relocate vary significantly. In some instances, a relocation decision
would be a fruitful subject of labor-management negotiations,\9\ while
in others it would not.\10\ For this reason, it is not feasible to
categorize all decisions to relocate as mandatory or nonmandatory
subjects of bargaining.
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\9\See, e.g., Reece Corp., 294 NLRB 448 (1989) (decision to relocate
unit work motivated by employer's failure to obtain economic relief from
union in contract negotiations and by its failure to persuade the union
to agree to labor cost reductions after the contract had gone into
effect); Pertec Computer Corp., 284 NLRB 810 (1987), supplemental
decision 298 NLRB 609 (1990) (decision to transfer work based on
consultants' cost study which showed potential savings of $2.6 million,
$2 million of which was attributed to labor costs); Dahl Fish Co., 279
NLRB 1084 fn. 3 (1986), enfd. 813 F.2d 1254 (D.C. Cir. 1987) (transfer
of unit work to nonunit employees motivated by labor costs).
\10\See, e.g., Metropolitan Teletronics, 279 NLRB 957, 958 (1986),
enfd. 819 F.2d 1130 (2d Cir. 1987) (decision to relocate motivated by
foreclosure on former facility, the lower mortgage interest rate and
more spacious quarters at the new facility, and the prospect of
Government assistance through the issuance of tax exempt bonds); Inland
Steel Container Co., 275 NLRB 929, 935-937 (1985), petition for review
denied sub nom. Steelworkers Local 2179 v. NLRB, 822 F.2d 559 (5th Cir.
1987) (decision to relocate unit work motivated by outdated facility,
7
limited space for growth and flooding in facility); Hawthorn Mellody,
Inc., 275 NLRB 339, 341 (1985) (loss of business at former location
principal reason for decision to relocate).
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In formulating a new analysis for relocation decisions, we are
mindful of the court's concern in First National Maintenance that an
employer ``must have some degree of certainty beforehand as to when it
may proceed to reach decisions without fear of later evaluations
labeling its conduct an unfair labor practice.'' 452 U.S. at 679.
Accordingly, we have endeavored to develop a test that provides guidance
and predictability to the parties.
In analyzing a decision to relocate unit work, we pay close
attention to the crucial inquiry posed by the Court in First National
Maintenance: Will requiring bargaining over the decision advance the
neutral purposes of the Act? In First National Maintenance, the Court
plainly believed that no such result would obtain, while in Fibreboard
the Court reached the opposite conclusion. In harmonizing the different
results reached in the two cases, there are at least three important
points to consider.
First, in First National Maintenance, the employer ``had no
intention to replace the discharged employees or to move that operation
elsewhere.'' 452 U.S. at 687. In contrast, Fibreboard involved the
``replace[ment] [of] existing employees with those of an independent
contractor.'' 379 U.S. at 213.
Second, in First National Maintenance, the Court was confronted with
a decision changing the scope and direction of the enterprise ``akin to
the decision whether to be in business at all.'' 452 U.S. at 677. In
Fibreboard, the employer's decision ``did not alter the Company's basic
operation.'' 379 U.S. at 213.
Third, in First National Maintenance, the employer's decision was
based ``solely [on] the size of the management fee [the nursing home]
was willing to pay.'' 452 U.S. at 687. In Fibreboard, ``a desire to
reduce labor costs . . . was at the base of the employer's decision to
subcontract.'' First National Maintenance, 452 U.S. at 680.
Measured by these three considerations, a decision to relocate unit
work case is more closely analogous to the subcontracting decision found
mandatory in Fibreboard than the partial closing decision found
nonmandatory in First National Maintenance. We will examine each of
these considerations in turn.
First, unlike the employer in First National Maintenance, an
employer relocating unit work does intend ``to replace the discharged
employees [and] to move th[e] operation elsewhere.'' 452 U.S. at 687. In
this respect, a relocation decision is similar to the Fibreboard
subcontracting decision described by Justice Stewart in his concurrence
as ``the substitution of one group of workers for another to perform the
same task . . . .'' 379 U.S. at 224.
Second, a relocation decision is not ``akin to the decision whether
to be in business at all.'' 452 U.S. at 677. A decision to relocate
presupposes that the employer intends to continue in business with the
unanswered question being where the business entity will be in operation
as opposed to whether it will be in operation. A decision to conduct
business at one location rather than another, standing alone, does not
generally involve a ``managerial decision [lying] at the core of
entrepreneurial control . . . concerning . . . the basic scope of the
enterprise.''\11\ Without more, the fact that an employer may relocate
work does not alter the employer's basic operation: the employer is
producing the same product for the same customers under essentially the
same working conditions.
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\11\Fibreboard, 379 U.S. at 223 (Stewart, J., concurring).
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Third, as the facts of this case and others\12\ illustrate, and
unlike the situation in First National Maintenance, a union may have
substantial ``control or authority'' over the basis for the employer's
decision to relocate. 452 U.S. at 687. Often this is due to the very
nature of a relocation decision. Because a relocation decision, like the
Fibreboard subcontracting decision, involves the replacement of one
8
group of employees with another, it logically follows that the
differential in the labor costs of the two groups may be of considerable
importance to the employer. The union representing the incumbent workers
has the ability to vary that differential and thereby influence the
employer's decision. Thus, the decision to relocate is susceptible to
resolution through collective bargaining.
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\12\See, e.g., Connecticut Color, 288 NLRB 699 (1988) (decision to
transfer unit work from one location to another motivated by desire to
cut labor costs); Arrow Automotive Industries, 284 NLRB 487 (1987), enf.
denied 853 F.2d 223 (4th Cir. 1988) (decision to transfer bargaining
unit work to another facility motivated by labor costs, particularly the
costs of health insurance); Litton Systems, 283 NLRB 973, 974 (1987),
enf. denied 868 F.2d 854 (6th Cir. 1989) (the most significant factor in
relocation decision was the wage differential between the old location
and the new one); Brown Co., 278 NLRB 783 (1986), enfd. 128 LRRM 2223
(9th Cir. 1987) (work transferred out of the unit in order to escape the
wage obligations of the parties' contract); McLoughlin Mfg. Corp., 182
NLRB 958, 964-965 (1970), enfd. as modified sub nom. Garment Workers v.
NLRB, 463 F.2d 907 (D.C. Cir. 1972) (decision to relocate based on labor
survey which showed employer could hire employees in new locale at lower
wage rates); and cases cited in fn. 9, supra. See also Hawthorn Mellody,
supra (labor costs a factor but loss of business at former location
principal reason for relocation decision).
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Based on the foregoing considerations, we announce the following
test for determining whether the employer's decision is a mandatory
subject of bargaining. Initially, the burden is on the General Counsel
to establish that the employer's decision involved a relocation of unit
work unaccompanied by a basic change in the nature of the employer's
operation. If the General Counsel successfully carries his burden in
this regard, he will have established prima facie that the employer's
relocation decision is a mandatory subject of bargaining. At this
juncture, the employer may produce evidence rebutting the prima facie
case by establishing that the work performed at the new location varies
significantly from the work performed at the former plant, establishing
that the work performed at the former plant is to be discontinued
entirely and not moved to the new location, or establishing that the
employer's decision involves a change in the scope and direction of the
enterprise. Alternatively, the employer may proffer a defense to show by
a preponderance of the evidence: (1) that labor costs (direct and/or
indirect) were not a factor in the decision or (2) that even if labor
costs were a factor in the decision, the union could not have offered
labor cost concessions that could have changed the employer's decision
to relocate.
The first prong of the employer's burden is self-explanatory: If the
employer shows that labor costs were irrelevant to the decision to
relocate unit work, bargaining over the decision will not be required
because the decision would not be amenable to resolution through the
bargaining process.
Under the second prong, an employer would have no bargaining
obligation if it showed that, although labor costs were a consideration
in the decision to relocate unit work, it would not remain at the
present plant because, for example, the costs for modernization of
equipment or environmental controls were greater than any labor cost
concessions the union could offer. On the other hand, an employer would
have a bargaining obligation if the union could and would offer
concessions that approximate, meet, or exceed the anticipated costs or
benefits that prompted the relocation decision, since the decision then
would be amenable to resolution through the bargaining process.
As an evidentiary matter, an employer might establish that it has no
decision bargaining obligation, even without discussing the union's
position on concessions, if the wage and benefit costs of the unit
employees were already so low that it was clear on the basis of those
figures alone that the employees could not make up the difference.\13\
In any event, an employer would enhance its chances of establishing this
defense by describing its reasons for relocating to the union, fully
9
explaining the underlying cost or benefit considerations, and asking
whether the union could offer labor cost reductions that would enable
the employer to meet its profit objectives.\14\
---------------------------------------------------------------------------
\13\For example, if a relocation of unit work would save an employer
a projected $10.5 million in costs for equipment modernization and
environmental controls (quite apart from any labor costs), and if the
employer's present labor costs totaled $10 million, then even if the
employees were willing to work for free, the union could not offer
sufficient labor cost concessions to offset the equipment and
environmental savings.
\14\Consistent with the cases decided under Otis Elevator, our test
announced today will require us to evaluate the factors which actually
motivated the employer's relocation decision rather than to engage in a
postdecisional examination of potential justifications for the decision.
In this regard, we agree with the court of appeals' proposition that
under Otis Elevator and its progeny ``two basic ingredients emerge: the
relevant factors must have been contemporaneous with or have pre-dated
the decision itself, and the exercise must involve an effort to
determine what was actually in the minds of those making the decision.''
880 F.2d at 1434. These ``basic ingredients'' are implicit in the test
we announce today. Thus, in order to successfully rebut the General
Counsel's prima facie case, the Respondent must show that the factors it
is raising in its defense were relied on at the time the relocation
decision was made.
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Perhaps the most significant differences between the analytical
framework we adopt today and those set forth in Otis Elevator concern
the definition and allocation of the parties' respective burdens. We
believe our proposed analysis more clearly apprises the parties of their
obligations at the bargaining table and in litigation.\15\ Further, we
believe that we are warranted in placing on the employer the burden of
adducing evidence as to its motivation for the relocation decision
because it alone, more often than not, is the party in possession of the
relevant information. Finally, we believe that our test is most
responsive to the central purposes for which the Act was created:
promoting labor peace through collective bargaining over those matters
suitable for negotiation where there is a general duty to recognize and
bargain with a labor organization.\16\
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\15\All three of the Otis Elevator tests suffer from other serious
flaws. As the court of appeals pointed out, the Dotson-Hunter test
``appears to be designed to favor and protect management prerogatives.''
880 F.2d at 1431. The Zimmerman test goes too far in the opposite
direction by requiring bargaining even when labor costs played no part
in the employer's decision. As Member Dennis frankly acknowledged, her
test is difficult to apply. 269 NLRB at 897.
\16\As a practical matter, the test announced today will encourage
and require the employer to evaluate all the factors motivating its
relocation decision when determining whether its course of action should
include negotiations with the union.
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If, under our analysis, the relocation decision is a mandatory
subject of bargaining, the employer's obligation will be the usual one
of negotiating to agreement or a bona fide impasse.\17\ However, we
recognize that there may be circumstances under which a relocation
decision must be made or implemented expeditiously.\18\ If such
circumstances are established, the Board will take them into account in
determining whether a bargaining impasse has been reached on the
relocation question. Accordingly, the extent of the employer's
obligation to notify the union and give it an opportunity to bargain
will be governed by traditional 8(a)(5) criteria, taking into account
any special or emergency circumstances as well as the exigencies of each
case.
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\17\Of course, it is well established that, under Sec. 8(d) of the
Act, an employer's duty to bargain does not include the obligation to
10
agree to a union proposal. H. K. Porter Co. v. NLRB, 397 U.S. 99 (1970).
\18\See, e.g., NLRB v. Transmarine Navigation Corp., 380 F.2d 933
(9th Cir. 1967) (employer threatened with loss of principal customer due
to inadequate facility); NLRB v. Rapid Bindery, 293 F.2d 170 (2d Cir.
1961) (same). We cite these cases only as examples of instances where
prompt action was necessary. We do not address the question whether the
particular relocation decisions at issue were, or were not, mandatory
subjects of bargaining.
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D. APPLICATION OF THE TEST
The basic decision at issue here is the decision to relocate the hog
kill and cut department work (bargaining unit work) from the
Respondent's unionized facility in Dubuque to its newly purchased
facility in Rochelle.\19\ The Respondent points to a number of other
cost-saving measures it instituted corporate wide during this period and
argues that the decision to relocate was just one part of an overall
restructuring plan necessitated by its increasingly severe financial
problems. Although this may be true, the record establishes that the
decision to relocate was a discrete decision which was considered and
implemented independently from the other measures taken by the
Respondent during this time. There is no evidence that the relocation
decision was accompanied by a basic change in the nature of the
employer's operation. The General Counsel has therefore established a
prima facie case that the decision involved herein is a mandatory
subject of bargaining giving rise to an obligation to bargain.
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\19\In its statement of position, the Union contends that a second
relocation decision is also at issue, namely, the proposed relocation of
certain processing work. This decision was never implemented because on
October 19, 1981, the Respondent and the Union signed a memorandum of
agreement in which the Union agreed to contract concessions in return
for retention of the processing work in Dubuque. The Union claims that
this agreement was the product of bad-faith bargaining and requests that
the employees be made whole for the lower wages and benefits they
received under its terms. For the following reasons, we find that the
Union's contention exceeds the scope of the remand.
First, the Union also argued to the court of appeals that two
proposed relocation decisions were at issue, but the court's decision
addresses only the decision to relocate the hog kill and cut work. In
this connection, we particularly note that the court began the second
paragraph of its opinion by stating that ``[t]his case focuses on events
that transpired in the `hog kill and cut' operations of Dubuque Packing
. . . .'' 880 F.2d at 1423. The court then proceeded to discuss the
facts relevant to the relocation of the hog kill and cut work in
substantial detail and relegated the proposed relocation of other work
to a few brief sentences. Id. at 1423-1427. Thereafter, the court
continued to describe the Respondent's decision as the relocation of the
hog kill and cut work without any reference to an additional relocation
decision involving processing work. Id. at 1427, 1428, 1434, 1436.
Second, the court's decision specifically lists the issues it
expects the Board to address on remand, and this contention of the Union
is not one of them. Id. at 1435-1439.
Finally, we note that, unlike the decision to relocate the hog kill
and cut operations, the Respondent did not implement the decision to
relocate the processing work and instead bargained to agreement with the
Union over its proposed action. As a result, the Respondent's decision
with respect to the processing work raises its own distinct issues. For
example, even if we were to find that the decision to relocate the
processing operations was a mandatory subject of bargaining, further
analysis would be required to determine whether the Respondent engaged
in lawful hard bargaining or unlawful surface bargaining. If bad-faith
bargaining were found, the Union's request for make-whole relief would
raise a difficult remedial issue in light of the Union's acceptance of
the Respondent's proposed contract concessions. If the court intended
the Board to address the validity of the October 1981 agreement, we
11
believe that the court would have mentioned these additional issues at
some point in its opinion.
Under these circumstances, we decline to pass on the Union's claims
on the ground that they go beyond the scope of the issues remanded to us
by the court of appeals.
---------------------------------------------------------------------------
The burden now shifts to the Respondent to establish that labor
costs were not a factor in the decision to relocate or that even if
labor costs were a factor, the Union could not have offered labor cost
concessions that could have changed the decision to relocate.\20\
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\20\Although our test differs from the three set forth in Otis
Elevator, all four tests focus on the factors which actually motivated
the employer's decision. See fn. 14, supra. In the instant case, the
record was fully developed on that question.
---------------------------------------------------------------------------
Addressing the first prong of the defense, we note that the
administrative law judge found that labor costs ``clearly were a factor
in the Respondent's decision to relocate the hog kill and cut work.''
287 NLRB at 537. Although the Respondent argues that labor costs were
not the determinative factor in motivating the decision to relocate, it
concedes that it was pursuing midterm concessions from the Union to use
as support for its request for further financing from its lenders and in
its overall attempts to keep the plant afloat economically. On this
record and as more amply described below, it is clear that labor costs
were a factor in the Respondent's decision to relocate. Thus, the
Respondent is not exempt from a bargaining obligation under the first
prong of the defense.
Turning to the second prong, the Respondent argues that regardless
of the fact that it sought concessions from the Union, the decision to
relocate would have been made in any event due to the financial problems
it had encountered with its lenders and the advantages of Rochelle's
physical facility. Our review of the record evidence requires us to
reject this defense. The repeated plea made by the Respondent to the
Union, its employees and even the press was that if the Union would
grant midterm wage and other concessions, the hog kill and cut work
would continue to be available in Dubuque.
As amply detailed in the judge's decision and the court's decision,
the Respondent began experiencing financial problems in 1977. From that
time until the relocation was effectuated in 1981 and even until the
complete plant closure took place in l982, the Respondent repeatedly
sought union concessions to alleviate its economic crisis. The
Respondent backed up its requests for assistance with the constant
threat that the hog kill and cut departments would be closed and that
eventually the entire plant would be closed in the absence of the grant
of some economic relief from the Union.
The relevant collective-bargaining agreements covered the periods
from September 1, 1976, to September 1, 1979, and from September 1,
1979, to September 1, 1982, extended to September 1, 1983. Most of the
parties' discussions about the Respondent's financial status occurred in
the context of the Respondent's requests for concessions during the
terms of the contracts.
The parties' discussions in this vein began in 1978. In response to
the Respondent's plea that it needed relief from the high cost of its
wage incentive program, the parties agreed to a 15-percent increase in
incentive standards in return for a one-time cash payment to employees.
Id. at 502.
In June and July 1980 the Respondent informed the Union that the
beef kill and processing departments would have to be shut down and that
eventually the hog kill and cut departments and the entire operation
would be closed because the Respondent was unable to remain competitive.
The Respondent proposed that in order to continue the operation,
production standards would have to be increased and incentive pay
eliminated.\21\ Charles Stoltz, the Respondent's president, stated
during negotiations that the future of the plant would be decided not by
management alone but by the concerted action of management, the Union
and the employees. In response to the Respondent's pleas and in return
12
for the Respondent's commitment not to seek further concessions during
the term of the contract, in August 1980, the Union agreed to
elimination of incentive pay. This saved the Respondent $5 million
annually. Id. at 504-505.
---------------------------------------------------------------------------
\21\Under the applicable collective-bargaining agreement, unit
employees were required to meet certain levels of production. Once those
levels were met, the employees were eligible for incentive payments.
---------------------------------------------------------------------------
In September l980 the Union requested that the Respondent reconsider
its previously announced decision to close the beef kill department. In
response, Stoltz wrote the Union that the Respondent would be willing to
consider keeping the beef kill department. Stoltz noted, however, that
in order to obtain backing from the banks that provided the Respondent's
financing, it would be necessary to convince them that the plant could
be returned to profitability by increasing production. Stoltz suggested
that the parties (and employees) consider the month of November as a
trial period for making a concerted and cooperative effort to increase
production. Id. at 505.
The Respondent's president emeritus, Robert Wahlert, wrote to
employees on October 29, 1980, telling them that the Respondent's
financial woes continued and appealing for increased productivity and a
joint effort by management and workers to do what was necessary to keep
the plant in business. Id. at 505-506.
On November 19, 1980, the Respondent's assistant director of labor
relations, Ernest Myers, wrote the Union to inform it of the
Respondent's decision to continue beef kill operations at the Dubuque
plant on a month-to-month basis. Myers relied on the improved work
performance of employees in beef operations as the basis for the more
optimistic outlook and as the basis for approaching the banks for more
assistance. Id. at 506.
In meetings beginning in December 1980 and continuing through March
1981, the Respondent attempted to obtain the Union's agreement to
increase the chain speed on the hog kill in order to increase
productivity.\22\ The Respondent told the Union its proposal was
motivated by its desire to remain competitive and to convince the
Mercantile Bank of St. Louis, its principal bank, to continue extending
credit to the Respondent. The Union rejected this proposal based on the
Respondent's earlier commitment not to request further midterm
concessions, and based on its contention that the production lines would
be undermanned at the increased chain speeds proposed.
---------------------------------------------------------------------------
\22\The chain speed dictates the number of hogs killed per hour. Any
increase in the chain speed would increase productivity and would
require the employees to work faster. As incentive pay had been
eliminated by this time, the effect of an increase in the chain speed
would be to require the employees to produce more for the same pay. Id.
at 506.
---------------------------------------------------------------------------
On March 30, 1981, the Respondent gave 6 months' notice of its
intention to close the hog kill and cut departments.\23\ The Respondent
conceded that the March 30, 1981 letter giving notice of the closing was
sent in response to the Union's rejection of the Respondent's efforts to
increase chain speeds. Id. at 507.
---------------------------------------------------------------------------
\23\The parties' collective-bargaining agreement required that 6
months' notice be given prior to closing.
---------------------------------------------------------------------------
On April 3, 1981, the Respondent sent employees a magazine article
which discussed problems confronting pork slaughterers. In its covering
letter to the employees, the Respondent emphasized that the article
pointed out that slaughterers paying $16 per hour were going out of
business, while those paying $8 per hour were expanding operations. Id.
at 508.
On April 8, 1981, the Respondent placed an advertisement in the
local newspaper. In this ad, the Respondent noted that it had lost
millions of dollars in the past several years but that after spending
13
$27 million in renovating the Dubuque plant, it did not want to leave
Dubuque. The Respondent also asked and answered the question of whether
the Company gave 6 months' notice of closing just to force further
concessions from the Union. The Respondent stated that the answer to
that question was no and that it intended to honor its commitment not to
request further modifications during the remainder of the labor
agreement (which was to expire in September 1982). Id. at 508.
On May 22, 1981, the local newspaper published a memorandum marked
``confidential'' from the Respondent's president, Stoltz, to Executive
Vice President Strausse which indicated that if plantwide concessions
were obtained, the closing could be averted.\24\ In the article, the
Respondent's corporation counsel, Clifford Less, was quoted as saying
that the Respondent would keep its plant open if plantwide wages were
frozen during the remainder of the contract. Less was also quoted as
saying that if the labor contract was not modified, it was possible that
the Dubuque plant would be completely closed but that if the plant
became more competitive in labor costs the plant could survive as a
production facility. Id. at 508-509.
---------------------------------------------------------------------------
\24\The manner in which this memorandum came into the local
newspaper's possession was not revealed. However, the authenticity of
the confidential memorandum is not in dispute.
---------------------------------------------------------------------------
At the end of May 1981, the Chamber of Commerce offered to mediate
differences between the parties in an attempt to keep the plant
operational. In response, the Respondent wrote to the Chamber
specifically linking the continued operation of the plant to its success
in obtaining a wage freeze from the Union. If the Union would agree to a
wage freeze for the remainder of the contract, the Respondent would
revoke the announced closing of the hog kill and cut. The Respondent
authorized the Chamber to present this proposal to the Union. The Union
had knowledge of the Respondent's proposal and on June 1, 1981, rejected
the Chamber's offer to mediate. Id. at 509 and fn. 32.
On June 8, 1981, at a meeting between the parties, the Respondent's
president, Stoltz, again laid the continued viability of the hog kill
and cut departments at the Union's door when he reiterated the
Respondent's offer that if the Union would agree to a wage freeze, the
Respondent would continue operations in the hog kill and cut departments
at least through the termination date of the parties' collective-
bargaining agreement. In return for the Union's agreement to a wage
freeze, the Respondent proposed that the employees could participate in
a profit-sharing plan. The Respondent gave the Union until July 1, 1981,
to officially respond to this proposal but asked that the Union present
the proposal to its membership at its meeting scheduled for June 9,
1981. On that day, the Union presented the proposal to its membership
and it was rejected. Id. at 510.
On June 10, 1981, the Respondent issued a press release which
announced that in light of the Union's rejection of the wage freeze/
profit-sharing proposal, it no longer felt bound by the July 1 deadline
and accordingly it would proceed with its plan to close the hog kill and
cut departments. Again, the decision to close was specifically linked to
the inability of the Respondent to obtain the Union's agreement to a
wage freeze. In this announcement, the Respondent revealed for the first
time an ``alternate plan'' to relocate the hog kill and cut departments.
Id. at 510-511.
Without notifying the Union of its ``alternate plan,'' the
Respondent had been investigating the possibility of relocating at least
since May. At that time the Respondent had signed options to lease two
plants, one in DuQuoin, Illinois, and the other in Des Moines, Iowa. On
June 10, 1981, the Respondent made an appointment to visit the Rochelle,
Illinois facility to which it eventually moved. A purchase agreement for
the Rochelle plant was concluded on July 10, 1981. (The options to lease
the other two plants were allowed to expire.) Id. at 511.
Meanwhile, the Union arranged to take the Respondent's wage freeze/
profit-sharing proposal to the membership again, in accord with the
earlier July 1, 1981 deadline set by the Respondent. The vote was
scheduled for June 28. Despite its earlier assertion that the July 1
14
deadline was no longer binding, the Respondent continued to lobby the
employees to accept a wage freeze. In correspondence, a press release,
and a written memorandum to the employees prior to the June 28, 1981
vote, the Respondent continued to tie the feasibility of continuing
operations at the Dubuque plant to the Union's acceptance of the wage
freeze proposal. The membership rejected the proposal. Id. at 513-515.
Press releases issued by the Respondent on July 1, 10, and 11, 1981,
announced that the Respondent would proceed with the closing of the hog
kill and cut departments in Dubuque by October 3, 1981, and that those
same operations would soon commence in Rochelle. The Respondent referred
to the operations in Rochelle as a ``replacement for Dubuque plant
operations.'' The Respondent noted that as products were processed or
manufactured at Rochelle, there would be a corresponding decrease in
production at Dubuque.\25\
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\25\On January 21, 1982, in testimony in another unfair labor
practice proceeding involving the same parties, the Respondent's vice
president Naylor testified that the purchase agreement for the Rochelle
plant was made once it was clear that there would be no modifications of
the collective-bargaining agreement, and that the reason for the
acquisition of Rochelle was directly related to the closing of the kill
and cut in Dubuque. Id. at 529-530.
---------------------------------------------------------------------------
In further negotiations conducted after July 1981, the Respondent
took the position that the decision to close the hog kill and cut
operations was irrevocable and that there was no duty to bargain over
the decision to partially close its operations. The Respondent was
willing to bargain over the effects of its decision.
Throughout these later negotiations, the parties were embroiled in a
controversy over an information request made by the Union related to the
Respondent's assertions that it was in severe financial trouble.\26\
During these negotiations and particularly in a meeting on September 25,
1981, the Respondent told the Union that the Respondent had lost $6.5
million in 10 months, but that if the Respondent had the labor contract
and labor costs of Iowa Beef Packers (a competitor), the Dubuque plant
would be in the black. Id. at 523.
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\26\In response to the Respondent's June 10, 1981 announcement of
its decision to relocate, the Union requested extensive financial
information to substantiate the Respondent's position that midterm
concessions were required in order to continue the operations at
Dubuque. The Respondent resisted the Union's request for information on
the basis that it did not believe corporatewide records were relevant to
the conditions at Dubuque and also because of confidentiality concerns.
A continuing dialogue between the parties as to the acceptability of the
Union's auditor and the conditions under which the auditor could reveal
financial information to the Union continued from June through October
1981. The General Counsel alleged that the Respondent violated Sec.
8(a)(5) by refusing to provide the Union with requested financial
information. The judge found no obligation to bargain over the decision
to relocate and, accordingly, no obligation to provide the requested
information. The judge stated, however, that if the Respondent had been
obligated to furnish the Union the requested information, ``it would not
have met that burden.'' Id. at 540 fn. 132.
Under the circumstances of this case, we believe it is unnecessary
to pass on the issue of whether the Respondent unlawfully refused to
provide the requested information to the Union. The information was
alleged to have been necessary in order for the Union to be able to
bargain intelligently about the Respondent's decision to transfer unit
work to Rochelle. As set forth in the remedy section infra, in view of
the closing of the Dubuque and Rochelle plants, we will not order the
Respondent to restore the status quo ante and bargain about the
relocation decision. Therefore, even if we were to find that the
Respondent unlawfully withheld the requested information from the Union,
we would not provide an affirmative order for that 8(a)(5) violation.
See Reece Corp., 294 NLRB 448 (1989). Accordingly, as the information
allegations raise complex issues that could serve only to further delay
15
the resolution of this protracted proceeding with no material effect on
the remedy, we find it unnecessary to address them.
---------------------------------------------------------------------------
The Respondent argues that its financial difficulties were so severe
that the decision to relocate would have been made regardless of success
or failure in obtaining concessions at the bargaining table. In support
thereof, the Respondent details a series of interactions it had with its
longtime lender, the Mercantile Bank of St. Louis (Mercantile), which
culminated in Mercantile withdrawing as the Respondent's primary lender
in March 1981. There is no question that the Respondent's financial
difficulties were mounting during the relevant period. In December 1980
the Respondent learned that its request for a $5 million loan for
upgrading the Dubuque facility had been turned down. In January 1981
Mercantile advised the Respondent that it wanted to terminate the
Respondent's $45 million revolving credit line and that Mercantile was
calling a $10 million loan to be due in March 1981. The Respondent met
the deadline for paying the $10 million loan but Mercantile terminated
the $45 million revolving line of credit in March 1981. By June 1981 the
Respondent had obtained financing with another group of lenders headed
by Manufacturers Hanover Commercial Corporation (Manufacturers Hanover).
This financing offered the Respondent a $50 million line of credit but
also allowed lenders to withdraw at any time. In January and February
1982, subsequent to the events alleged in the complaint, some of the
lending banks in the Manufacturers Hanover group withdrew their
participation and in April 1982 the group terminated the financing
arrangement. Id. at 533-534.
The Respondent also points to the advantages of the Rochelle plant
over the Dubuque plant as another basis for the decision to relocate.
The Rochelle plant was a newer facility with production all on one
floor. The plant in Dubuque by contrast was an older five-story building
with numerous cellars and additions. As noted, the Respondent believed
further modernization of the Dubuque plant was required to get optimum
production and had been unable to retain financing for that purpose.
Although the financial problems the Respondent was experiencing are
not to be minimized, the Respondent has not established that the Union
could not have offered labor cost concessions that could have changed
the decision to relocate. First of all, the Respondent's actions during
this period demonstrate that the Respondent's own view of the matter was
that its financial situation could be alleviated if it could obtain
relief from its labor agreements. As detailed above, for 3 years
previous to the decision to relocate, the Respondent's constant refrain
to the Union and its employees was that a reduction in labor costs and/
or an increase in production standards was the key to continuing
operations at Dubuque. The Respondent linked its ability to secure
further financing from its lenders to its ability to show them that the
operation could be more productive. The Respondent's agents
unequivocally and repeatedly told the press, the Union, its employees,
and the Chamber of Commerce that if the Union would grant concessions,
the Respondent would continue the Dubuque hog kill and cut operations at
least through September 1, 1982, when its collective-bargaining
agreement would expire. If, on the other hand, the Union rejected the
Respondent's proposals, the record establishes that the Respondent
would--and did--react accordingly. Thus, when the Union refused to agree
to an increase in the chain speed, the Respondent announced on March 30,
1981, that the hog kill and cut departments would be closed. When the
Union refused to agree to a wage freeze on June 9, 1981, the Respondent
announced the next day the plan to relocate the hog kill and cut
operations. When the Union again rejected a wage freeze on June 28,
1981, the Respondent announced on July 1, 1981, that the closing of the
hog kill and cut departments would proceed. Even after the fact, in
January 1982, the Respondent in testimony in an unrelated unfair labor
practice proceeding, attributed the relocation to its inability to get
the Union to agree to concessions.\27\
---------------------------------------------------------------------------
\27\Transcript excerpts from this proceeding were made a part of the
record herein. Id. at 529-530.
---------------------------------------------------------------------------
16
Second, the judge's reliance on the fact that the Manufacturers
Hanover financing package was terminated in April 1982 is misplaced. Id.
at 537 fn. 115. This postdecisional event may be relevant to emphasize
that the financing did not solve all the problems experienced by the
Respondent, but, as the court noted, it simply cannot be relied on as
evidence of what was driving the Respondent's decision to relocate some
10 months before. 880 F.2d at 1434.
Third, the Respondent's contentions that the Rochelle plant was a
far superior facility to the Dubuque plant, which it argues had become
cumbersome and in need of repair, are not persuasive. On June 10, 1981,
when the Respondent first announced its decision to relocate, it had
options to lease at two plants, one in DuQuoin, Illinois, and the other
in Des Moines, Iowa. At the time of the announcement, the Respondent's
officials had not yet even seen the Rochelle plant. Thus, if it was to
relocate, at that point it appeared that DuQuoin and Des Moines were the
options it was considering. Other than the testimony of President Stoltz
that the reason for the July 1, 1981 deadline for the Union's answer to
the Respondent's wage freeze proposal was to give the Des Moines plant
time to get ``ready'' by October 3, the record is devoid of evidence as
to the condition of either of those plants. Thus, although the
Respondent now relies in part on the condition of the Dubuque plant as
compared with the Rochelle plant, it appears clear that those
differences were not considered at the time the decision was made.
Neither does it appear that the Respondent relied on the superiority of
the plants it had seen at the time it made its decision. The fact that
the Respondent was apparently seriously considering relocation to
DuQuoin or Des Moines, without ever positing that those plants were
technologically superior to the Dubuque plant, militates against a
finding that the alleged disadvantages of the Dubuque plant
significantly influenced the decision to relocate. Further, as the judge
pointed out, the Respondent had spent $27 million renovating the Dubuque
plant in the late 1970s and the Respondent's president emeritus Wahlert
had described the plant in October 1982 as virtually state of the art.
Id. at 531.
Finally, we do not agree with the Respondent's reliance on several
other cost-cutting measures unrelated to the bargaining unit as evidence
that labor costs were not the key to its decision to relocate. In light
of the overwhelming evidence that the Respondent repeatedly linked its
future at Dubuque to its ability to reduce wages and increase
production, the fact that the Respondent undertook other cost-savings
measures does not establish that the Union could not have offered labor
cost concessions that could have changed the decision to relocate.
For all of these reasons, we find that the General Counsel has
established a prima facie case that the decision to relocate the hog
kill and cut operations was a mandatory subject of bargaining and that
the Respondent has failed to rebut it or proffer a defense supported by
a preponderance of the evidence. Accordingly, we conclude that the
Respondent's failure to bargain over that decision violated Section
8(a)(5) and (1) of the Act.\28\
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\28\We overrule our original decision to the extent it is
inconsistent with this supplemental decision. In so doing, we have
reconciled the result reached in the instant case with that contained in
certain other Board decisions the court cited and have thereby
eliminated the apparent inconsistency in Board precedent that concerned
the court. 880 F.2d at 1437-1438.
The court stated that if, on the one hand, we again concluded that
no duty to bargain arose over the relocation decision, it expected us to
address the following question: ``notwithstanding the company's freedom
to bargain without any good faith obligations when only permissive
subjects are brought to the negotiating table, do good faith obligations
arise when it brings mandatory subjects to the table as well and seeks
concessions on these matters in exchange for company accessions
pertaining to permissive subjects?'' Id. at 1438. If, on the other hand,
we were to find that the Respondent was under a duty to bargain over the
relocation decision, the court stated that this question would be moot
and drop out of the case. Id. In view of our finding above that the
17
Respondent violated Sec. 8(a)(5) by failing to bargain over the
relocation decision, we conclude, consistent with the terms of the
court's remand, that it is unnecessary for us to address the additional
question the court discussed.
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E. THE RESPONDENT'S DEFENSES LACK MERIT
For the reasons set forth in our original decision, we continue to
find no merit in the Respondent's contentions that its contract with the
Union gave it the right to relocate the hog kill and cut operations
without bargaining with the Union, that the Union waived any bargaining
right it might have had by failing to make a timely demand for
negotiations, and that the Board is estopped from proceeding against the
Respondent because of statements made by Board agents investigating the
unfair labor practice charge. 287 NLRB at 538-539, 542. With regard to
the Respondent's waiver defense, we additionally rely on the reasons set
forth below.
1. CONTRACTUAL WAIVER
The Respondent argues that the management-rights clause in the
parties' contract expressly reserves to the Respondent the right
unilaterally to relocate unit work and that its interpretation of the
clause is confirmed by the parties' bargaining history, the Respondent's
past practice, and an arbitrator's decision.
The management-rights clause grants the Respondent the exclusive
right ``to determine the products to be handled, produced or
manufactured.''\29\ It is well settled that the waiver of a statutory
right will not be inferred from general contractual provisions. Rather,
such waivers must be clear and unmistakable.\30\ Generally worded
management-rights clauses will not be construed as waivers of statutory
bargaining rights.\31\ Here, the management-rights clause does not
mention decisions to relocate operations. Instead, the language relied
on by the Respondent addresses an entirely different matter (decisions
as to what to produce). Accordingly, we find that the express language
of the management-rights clause does not establish that the Union waived
its right to bargain about the relocation decision.\32\
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\29\The clause is set forth in full in our original decision. 287
NLRB at 500.
\30\Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708 (1983). See
generally Johnson-Bateman Co., 295 NLRB 180, 184-188 (1989).
\31\Johnson-Bateman, supra at 184.
\32\The Respondent's reliance on American Stores Packing Co., 277
NLRB 1656, 1658 (1986), is misplaced. In that case, the management-
rights clause gave the employer the right ``to determine whether and to
what extent the work required in its business shall be performed by
employees covered by this Agreement.'' The Board found that this
language expressly allowed the employer unilaterally to remove all
bargaining unit work. The management-rights clause here contains no such
explicit language.
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The history of bargaining about the management-rights clause fails
to demonstrate that the Union waived its right to bargain about the
relocation decision. During negotiations in 1976, the Union
unsuccessfully sought to impose the same limitations on relocating unit
work that were already contained in the management-rights clause for
subcontracting (i.e., only in the event of ``absolute economic
necessity'' established to the satisfaction of union officials). During
negotiations in 1979, the Union unsuccessfully sought to prohibit the
relocation of unit work altogether. Thus, these union proposals went far
beyond requiring the Respondent merely to bargain about decisions to
relocate unit work. Contrary to the Respondent's contention, the Union's
failure to obtain such sweeping proposals does not establish that the
parties ``fully discussed and consciously explored'' the Union's
statutory bargaining rights with respect to work relocations or that the
18
Union ``consciously yielded or clearly and unmistakably waived its
interest in the matter.''\33\
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\33\Johnson-Bateman, supra at 185.
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With respect to past practice, the Respondent claims that it
unilaterally relocated unit work on a number of occasions and that the
Union acknowledged that it had the right to do so. Even if the Union
failed to challenge prior relocations affecting the bargaining unit,
``[a] union's acquiescence in previous unilateral changes does not
operate as a waiver of its right to bargain over such changes for all
time.''\34\ Moreover, to the extent that these relocations did not have
an adverse effect on unit employees, the Union's alleged failure to
request bargaining is of no moment. Park-Ohio Industries v. NLRB, 702
F.2d 624, 629 (6th Cir. 1983).
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\34\Id. at 23 (citation omitted).
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Furthermore, the record does not show that the Union clearly and
unmistakably acknowledged a contract right on the part of the Respondent
to relocate unit work. In 1974, the Union withdrew a grievance about
subcontracting when the Respondent decided to discontinue the product in
question. The Union's statement that it would reactivate the grievance
if the Respondent attempted to ``produce this product in another plant
other than one owned [solely] by Dubuque Packing Company'' merely shows
the Union's understanding that the contract limited the Respondent's
decision making only with respect to subcontracting. The statement is
not a concession that the Union, by contract, relinquished its statutory
right to bargain over relocation decisions. Similarly, in 1975, the
Union withdrew another grievance over subcontracting because the plant
performing the work was acquired by the Respondent. Here, too, the
Union's withdrawal of the grievance indicates at most its belief that
the subcontracting restrictions of the contract had not been violated.
Finally, the 1980 arbitrator's decision concerning a relocation of
unit work does not establish a waiver. The arbitrator held only that a
relocation of unit work from one companyowned plant to another did not
constitute subcontracting and therefore was not subject to the
limitations the contract imposed on subcontracting. Thus, the arbitrator
merely decided that the relocation did not violate the subcontracting
provisions of the contract. He did not address the separate issue before
us of whether the management-rights clause waived the Union's bargaining
rights with respect to relocations. See Dennison National Co., 296 NLRB
169 fn. 6 (1989) (an arbitrator's finding that an employer did not
violate the contract is not the equivalent of a finding that the
contract authorized the employer to act unilaterally).
Accordingly, for all of these reasons, we reject the Respondent's
contention that the contract waived the Union's right to bargain over
the decision to relocate the hog kill and cut operations.
2. FAILURE TO TIMELY REQUEST BARGAINING
The Respondent also contends that the Union failed to timely request
bargaining over the relocation decision. On June 10, 1981, the
Respondent advised the Union for the first time that it intended to
relocate the hog kill and cut departments.\35\ On June 17, 1981, the
Union informed the Respondent that a request for information would be
forthcoming. On June 19, 1981, the Union confirmed in writing that a
request for information was en route and stated that the receipt of the
requested information would allow the Union to meaningfully evaluate the
Respondent's proposed changes to the contract. 287 NLRB at 511. As
discussed above, the Respondent's position was that its proposed
contract changes were necessary in order to continue the hog kill and
cut operations in Dubuque.
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\35\Contrary to the Respondent's contention, the record will not
support a finding that the Union knew before June 10, 1981, that the
Respondent was planning a relocation rather than a closing. In this
19
regard, we note that it is well established that ``mere suspicion or
conjecture'' is not a substitute for actual notice. Garment Workers v.
NLRB, 463 F.2d 907, 918 (D.C. Cir. 1972).
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On June 23, 1981, the Union requested extensive financial
information from the Respondent. On June 25, 1981, the Union stated that
it would agree to place the July 1, 1981 cost-of-living increase in
escrow if the Respondent would agree to keep the plant open pending
resolution of the contract modification issue. The Respondent rejected
this proposal and repeated its demand that the Union respond to the wage
freeze proposal by July 1, 1981. Also, on June 25, 1981, the Union again
informed the Respondent that the information requested was necessary to
enable the Union to determine whether to enter into negotiations over
modifications to the contract. 287 NLRB at 512-513. The next day, the
Respondent formally responded to the information request, stating in
pertinent part as follows:
Your request for this information appears to be related to a
desire to negotiate with the Company as to its decision to close
part of its operations. As you know, I am sure, the U.S. Supreme
Court ruled just this week that an employer has no obligation to
bargain with its employees over the decision to close part of a
business. [287 NLRB at 514.]
It is well established that a request to bargain ``need take no
special form, so long as there is a clear communication of meaning.''
Armour & Co., 280 NLRB 824, 828 (1986) (citation omitted). Here, there
was undoubtedly such a communication. Shortly after the Union was
notified of the relocation decision, it requested information the Union
considered relevant to the decision and a delay in the implementation of
the decision.\36\ The Respondent's own reply to the Union's request
shows that the Respondent clearly understood that the information was
requested for purposes of bargaining over the hog kill and cut work.
Accordingly, we find no merit in the Respondent's claim now that the
Union never made its bargaining desires plain.
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\36\In other cases, the Board has found that a request for
information is tantamount to a request for bargaining. E.g., Grand
Islander Health Care Center, 256 NLRB 1255, 1256 (1981); Nappe-Babcock
Co., 245 NLRB 20, 21 fn. 4 (1979). We find Kentron of Hawaii, 214 NLRB
834 (1974), relied on by the Respondent, to be distinguishable. In
dismissing the unilateral change allegation in that case, the Board
relied primarily on the union's delay in responding to the employer's
offer to bargain in light of the time constraints present in that case.
To the extent Kentron of Hawaii suggests that the union's request in
that case for ``standard information'' did not constitute a proper
request for bargaining over the specific change proposed by the
employer, we note that the information requested by the Union here was
far from ``standard.'' Moreover, any time constraints present in this
case were due to the Respondent's failure timely to disclose its
relocation plans.
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CONCLUSION OF LAW
By failing and refusing to bargain collectively with the Union as
the exclusive representative of its employees in the appropriate unit
concerning the decision to relocate the hog kill and cut operations from
its plant in Dubuque, Iowa to its plant in Rochelle, Illinois, the
Respondent has engaged in unfair labor practices affecting commerce
within the meaning of Section 8(a)(5) and (1) and Section 2(6) and (7)
of the Act.
REMEDY
Having found that the Respondent has engaged in certain unfair labor
practices within the meaning of Section 8(a)(5) and (1) of the Act by
20
failing and refusing to bargain with the Union about the Respondent's
decision to relocate the hog kill and cut operations from its Dubuque
plant to its Rochelle plant, we shall order the Respondent to cease and
desist from engaging in such conduct and to take certain action to
effectuate the policies of the Act.
The Respondent's breach of its obligation to bargain with the Union
about its decision to relocate the hog kill and cut operations from the
Dubuque plant ceased as of October 15, 1982, the day the Respondent
closed and sold the Dubuque and Rochelle plants. Accordingly, we shall
order the Respondent to make whole any employees who were terminated or
laid off as a result of the Respondent's decision to relocate the hog
kill and cut operations from the Dubuque plant by the payment of
backpay, including fringe benefits but less interim earnings, from the
date of their termination or layoff through October 15, 1982, the date
of the closure of the Dubuque and Rochelle plants. Backpay is to be
computed in the manner set forth in F. W. Woolworth Co., 90 NLRB 289
(1950), with interest to be computed in the manner prescribed in New
Horizons for the Retarded, 283 NLRB 1173 (1987).
In addition, we shall order the Respondent to establish a
preferential hiring list of all employees terminated or laid off as a
result of the Respondent's decision to relocate the hog kill and cut
operations from the Dubuque plant, and to offer reinstatement to those
employees if the Respondent resumes hog kill and cut operations in the
Dubuque, Iowa or Rochelle, Illinois areas.\37\
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\37\See Eltec Corp., 286 NLRB 890, 898 (1987), enfd. 870 F.2d 1112
(6th Cir. 1989).
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Finally, in view of the fact that the Respondent has closed its
Dubuque plant, we shall require the Respondent to mail to each employee
terminated or laid off as a result of its decision to relocate the hog
kill and cut operations from the Dubuque plant a copy of the attached
notice marked ``Appendix.''
ORDER
The National Labor Relations Board orders that the Respondent,
Dubuque Packing Company, Inc., Dubuque, Iowa, its officers, agents,
successors, and assigns, shall
1. Cease and desist from
(a) Failing and refusing to bargain collectively with United Food
and Commercial Workers International Union, AFL-CIO, Local No. 150A, as
the exclusive representative of its employees in the appropriate unit
set forth below, about decisions entailing mandatory subjects of
bargaining. The appropriate unit is:
All production employees employed by the Respondent at its
Dubuque, Iowa plant.
(b) In any like or related manner interfering with, restraining, or
coercing employees in the exercise of the rights guaranteed them by
Section 7 of the Act.
2. Take the following affirmative action necessary to effectuate the
policies of the Act.
(a) Make whole any employees who were terminated or laid off as a
result of the Respondent's decision to relocate the hog kill and cut
operations from the Dubuque plant by payment of backpay, including
fringe benefits but less interim earnings, from the date of their
termination or layoff through October 15, 1982, the date of closure of
the Dubuque and Rochelle plants. Backpay is to be computed in the manner
set forth in the remedy section of this decision.
(b) Establish a preferential hiring list of all employees who were
terminated or laid off as a result of the Respondent's decision to
relocate the hog kill and cut operations from the Dubuque plant and, if
the Respondent resumes hog kill and cut operations in the Dubuque, Iowa,
or Rochelle, Illinois areas, offer reinstatement to those employees to
their former or substantially equivalent positions.
21
(c) Preserve and, on request, make available to the Board or its
agents for examination and copying, all payroll records, social security
payment records, timecards, personnel records and reports, and all other
records necessary to analyze the amount of backpay due under the terms
of this Order.
(e) Mail to each employee terminated or laid off as a result of the
Respondent's decision to relocate its hog kill and cut operations from
the Dubuque plant a copy of the attached notice marked ``Appendix.''\38\
Copies of the notice, on forms provided by the Regional Director for
Region 33, after being signed by the Respondent's authorized
representative, shall be mailed by the Respondent immediately upon
receipt.
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\38\If this Order is enforced by a judgment of a United States court
of appeals, the words in the notice reading ``Posted by Order of the
National Labor Relations Board'' shall read ``Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.''
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(f) Notify the Regional Director in writing within 20 days from the
date of this Order what steps the Respondent has taken to comply.
APPENDIX
Notice To Employees
Posted by Order of the
National Labor Relations Board
An Agency of the United States Government
The National Labor Relations Board has found that we violated the
National Labor Relations Act and has ordered us to mail and abide by
this notice.
Section 7 of the Act gives employees these rights.
To organize
To form, join, or assist any union
To bargain collectively through representatives of their own
choice
To act together for other mutual aid or protection
To choose not To engage in any of these protected concerted
activities.
We will not fail and refuse to bargain collectively with United
Food and Commercial Workers International Union, AFL-CIO, Local No.
150A, as the exclusive representative of our employees in the
appropriate unit set forth below, about decisions entailing mandatory
subjects of bargaining. The appropriate unit is:
All production employees employed at our Dubuque, Iowa plant.
We will not in any like or related manner interfere with, restrain,
or coerce you in the exercise of the rights guaranteed you by Section 7
of the Act.
We will make whole any employees who were terminated or laid off as
a result of our decision to relocate the hog kill and cut operations
from our Dubuque, Iowa plant to our Rochelle, Illinois plant, by paying
backpay plus interest, and including fringe benefits, but excluding
interim earnings, from the date of their termination or layoff through
October 15, 1982, the date of our closure and sale of the Dubuque and
Rochelle plants.
We will establish a preferential hiring list of all employees
terminated or laid off as a result of our decision to relocate the the
hog kill and cut operations, and if we resume hog kill and cut
operations in the Dubuque, Iowa, or Rochelle, Illinois areas, we will
22
offer reinstatement to those employees to their former or substantially
equivalent positions.
Dubuque Packing Company, Inc.
23