E.I. Dupont de Nemours

National Labor Relations Board - Administrative Judge Opinions

Dec 15, 2005

09-CA-040777 (N.L.R.B. Dec. 15, 2005)

JD-92-05
Louisville, KY

UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES

E.I. DUPONT DE NEMOURS, LOUISVILLE WORKS Cases 9-CA-40777
9-CA-41634
and

PAPER, ALLIED-INDUSTRIAL, CHEMICAL
AND ENERGY WORKERS INTERNATIONAL UNION AND
ITS LOCAL 5-2002

Kevin P. Luken, Esq.,
for the General Counsel.
Kathleen A. Hostetler, Esq.
(McGuire Woods, LLP), of Atlanta, Georgia,
for the Charging Party.
Mark L. Keenan, Esq., (Legal Department ,
E.I. DuPont de Nemours and Company),
of Wilmington, Delaware, for the Respondent.

Statement of the Case

Karl H. Buschmann, Administrative Law Judge. This case was tried in Louisville,
Kentucky, on June 21, 2005. The charge in Case 9-CA-40777 was filed January 2, 2004, and a
charge in Case 9-CA-41634 was filed January 5, 2005.1 (The additional allegations in Case
9-CA- 40919 were settled). The consolidated complaint was issued March 18, 2005. It alleges
that the Respondent, E.I. DuPont De Nemours, Louisville Works, violated Section 8(a)(1) and
(5) of the National Labor Relations Act (the Act) by implementing changes to its Beneflex 2004,
Health and Welfare Benefits without the consent of the Union, the recognized collective
bargaining representative of the employees at its Louisville Works, and without affording the
Union an opportunity to bargain.

On the entire record, including my observation of the demeanor of the witnesses, and
after considering the briefs and reply briefs filed by the General Counsel, the Union and the
Respondent, I make the following

Findings of Fact

I. Jurisdiction

The Respondent, a corporation, is engaged in the manufacture of fluoro-products at its
facility in Louisville, Kentucky, where it annually sold and shipped goods valued in excess of
$50,000 from its Louisville, Kentucky facility directly to points outside the Commonwealth of
Kentucky. The Respondent admits and I find that it is an employer engaged in commerce within
1 All dates are from 2004-2005 unless otherwise indicated.

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the meaning of Section 2(2), (6), and (7) of the Act and that the Union is a labor organization
within the meaning of Section 2(5) of the Act.

II. Alleged Unfair Labor Practices

This case presents the legal issue based upon a stipulated factual record, whether the
Respondent violated the Act by unilaterally changing health care benefits for unit employees
following the expiration of the collective bargaining agreement. The record consists of the
Stipulation of Facts and 56 exhibits, including the expired collective bargaining agreement,
copies of DuPont’s medical insurance plan, known as DuPont Beneflex Medical Care Plan and
copies of DuPont’s benefit plan for its employees, known as Beneflex Flexible Benefits Plan, as
well as letters sent by the parties. The record also contains the testimony of Pamela Murray,
senior consultant of DuPont. The following summary of relevant facts is primarily based upon
the Stipulated Facts and the exhibits received into the record (Jt. Exh. A).

The Respondent, E.I. DuPont De Nemours, Louisville Works, and the Union have had a
bargaining relationship for over 50 years. During that time, the Neoprene Craftsmen Union
(NCU) represented the production and maintenance employees at the Louisville Works. In
June, 2002, NCU voted to affiliate with the Paper, Allied-Industrial, Chemical, and Energy
Workers International Union (PACE) and became Pace Local 5-2002. In April 2005, Pace
merged with the Steelworkers of America and became USW.

The Respondent and the Union (NCU) were parties to collective bargaining agreements
covering DuPont’s bargaining unit employees. The agreement continued year to year unless
reopened by one of the parties 60 days prior to the expiration date of the contract. The
contracts provided for a wage re-opener which was exercised annually. The parties’ most
recent collective bargaining agreement was effective from June 13, 1997 to March 21, 2002.
The prior agreement ran from May 25, 1994 to March 21, 1997.

Of significance are the Respondent’s Beneflex Plan (Jt. Exh. 2), and the Beneflex
Medical Care Plan (Jt. Exh. 3). During negotiations for the March 1994 agreement, the
Respondent proposed and the Union (NCU) accepted the proposal to have the employees
covered by the DuPont Beneflex Medical Care Plan (Beneflex Medical). More specifically, the
bargaining agreement provides: “The COMPANY will provide basic Hospital and Medical-
Surgical coverage as set forth in the DuPont BeneFlex Medical Care Plan.” (Jt. Exh. 1). The
parties further agreed that employees would be covered by the DuPont U.S. Region-wide
Beneflex Flexible Benefits Plan (Beneflex Plan). The Beneflex Plan is a cafeteria-style benefits
plan, which includes a variety of benefit options in addition to health care coverage, such as
dental coverage, vision coverage, and life insurance. Employees are provided with annual
enrollment periods each fall at which point the employee elects the level of health care desired
and other elections of benefit options. Beneflex Medical is a self-insured medical care option
encompassed within the Beneflex Plan. All DuPont sites in the United States participate in
Beneflex. The Beneflex Plan, including Beneflex Medical, was implemented at the Louisville
site effective January 1, 1995.

During the negotiations for the 1994 collective bargaining agreement, the Respondent
pointed out to the Union that under the terms of the Beneflex Plan, the Respondent would be
permitted to alter the level and/or costs of benefits under the plan on an annual basis. The
Respondent also noted that such changes would be made on a U.S. Region-wide basis. Based
on these understandings, the Union membership accepted the Beneflex Plan. In May, 1994,
the Union (NCU) ratified the collective bargaining agreement which cited DuPont’s Beneflex
Medical Plan. Under the terms of the Beneflex Plan and the Beneflex Medical Plan, the

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Respondent has the right to change or alter the level or cost of benefits under the plan on an
annual basis. Both documents, the Beneflex Plan and the Beneflex Medical Plan, contain
identical provisions to that effect, stating, inter alia: “The Company reserves the sole right to
change or discontinue this plan in its discretion, provided, ---“ (Jt. Exhs. 2, 3).

In the fall of 1995, the Respondent presented to the Union (NCU) with a summary of any
upcoming changes to the Beneflex Pan, as well as any changes or premium increases for
Beneflex Medical, for the upcoming year. The Respondent subsequently mailed a “Plain Talk”
to all U.S. Region DuPont employees, including Louisville employees represented by the Union
(NCU). The Plain Talk was a publication used and distributed by the Respondent each fall to
communicate changes to the Beneflex Plan, including any changes or premium increases to
Beneflex Medical, to all participants in the in the Beneflex Plan for the upcoming calendar year.

On January 1, 1996, the Respondent implemented the changes to the Beneflex Plan.
The terms of the Beneflex Plan and the Beneflex Medical allowed the Respondent to alter costs
incurred by unit members and/or levels of benefits received by unit members under the Plan.
The Respondent did not offer to negotiate over these changes, nor did the Union seek to
bargain over these changes.

In the fall of each year thereafter, from 1995 to 2001, the Respondent and the Union
met. The Respondent presented the union representatives with a summary of any changes for
the upcoming year to the Beneflex Plan, as well as any changes or premium increases for
Beneflex Medical. The Respondent subsequently mailed a “Plain Talk” each year to all U.S.
Region DuPont employees, including the Louisville employees represented by the Union. On
January 1 of each year, from 1996 to 2002, the Respondent implemented the changes to the
Beneflex Plan which had earlier been presented to the Union. The Respondent did not offer to
negotiate over these changes, nor did the Union seek to bargain over these changes. In some
years the Respondent implemented 5 changes, in other years 7 changes, and in 2002 the
Company implemented 13 changes. The changes included, increases in premiums for medical
coverage, changes to pharmacy benefits, increases to premiums for vision coverage and, in the
following year, decreases in premiums for vision coverage, and changes in the rules for spousal
medical coverage.

On January 16, 2002, the Union (NCU) notified the Respondent that it intended to open
negotiations for a successor contract. On February 26, 2002, the parties began negotiations for
a successor collective bargaining agreement. The parties agreed that if an agreement had not
been reached by the contract negotiation date, management would honor the terms and
conditions of the contract day-to-day until something different was bargained. On March 21,
2002, the bargaining agreement between the Respondent and the Union (NCU) expired (Jt.
Exh. 9).

In June of 2002, the Union (NCU) voted to affiliate with Paper, Allied-Industrial, Chemical
and Energy Workers International Union (PACE). The Respondent immediately recognized
PACE.

In the fall of 2002, the Respondent met with the Union and presented a summary of the
changes for the Beneflex Plan, as well as changes and/or premium increases in Beneflex
Medical, for the upcoming year. The Respondent subsequently mailed a “Health Care 2003
Communication for Employees” (in lieu of a “Plain Talk”) to all U.S Region DuPont employees,
including Louisville employees represented by the Union.

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On October 24, 2002, and November 27, 2002, the Union (PACE Local 5-2002) on
behalf of the DuPont bargaining unit, wrote to the Respondent, contending that any changes to
the Beneflex were subject to good faith bargaining before implementation, and requesting
bargaining on this subject (Jt. Exhs. 35, 37(a)). On November 21 and December 19, 2002, the
Respondent wrote to the Union reiterating its position that it was not required to bargain over
any changes to the Beneflex Plan, including premium increases (Jt. Exhs. 36, 37).

On January 1, 2003, the Respondent implemented the changes to the Beneflex Plan for
the DuPont bargaining unit employees. The terms of the Beneflex Plan and Beneflex Medical
allowed the Respondent to alter the costs incurred by unit members and/or the levels of benefits
received by unit members. The Union requested bargaining, however, the Respondent did not
offer to, nor did it, negotiate over these changes.

On June 2, 2003, the Union (PACE Local 5-2002) filed an unfair labor practice charge
(Case 9-CA-40262-1), alleging that the Respondent violated the Act by unilaterally
implementing changes to the Beneflex Plan, including increased premiums, for the DuPont
bargaining unit employees. On December 10, 2003, these charges were dismissed on (10(b)
issue) procedural grounds. The decision was upheld on March 5, 2004, by the Office of
Appeals.

In the fall of 2003, while negotiations for a successor agreement were ongoing, the
Respondent and the Union (PACE Local 5-2002) met and the union representatives were
presented with a summary of changes for the upcoming year to the Beneflex Plan, as well as
changes and/or premium increases for Beneflex Medical for the upcoming year. The
Respondent subsequently mailed a “Plain Talk” to all U.S. Region DuPont employees.

On October 22, 2003, the Union (PACE Local 5-2002) again wrote to the Respondent
contending that any changes to the current Beneflex Plan for the Dupont bargaining unit were
subject to good faith bargaining before implementation, and requesting bargaining on the
proposed changes (Jt. Exh. 43). On October 22, 2003, the Respondent wrote to the Union
restating its position that the Respondent had the right to make changes to the Beneflex Plan
(Jt. Exh. 44). The Union reiterated its position on November 4, 2003, that the Respondent was
required to bargain over any changes to the Beneflex Plan and that any reliance on the
management rights clause was misplaced (Jt. Exh. 45).

On January 1, 2004, the Respondent implemented the changes to the Beneflex Plan for
the DuPont bargaining unit employees. These changes included increases in premiums for
medical coverage, implementation of a new dental plan, and the addition of a legal services
plan. The Union requested to bargain over the changes, however, the Respondent did not offer
to, nor did it, negotiate over these changes.

The same scenario was repeated the next year. In the fall of 2004, while negotiations for
a successor agreement were continuing, the Respondent presented the Union with a summary
of changes to the Beneflex Plan, as well as changes or premium increases for the Beneflex
Medical Plan for the upcoming year. On October 14, 2004, the Union (PACE Local 5-2002)
wrote to the Respondent contending that any changes to the current Beneflex Plan for the
Dupont bargaining unit were subject to good faith bargaining (Jt. Exh. 48). On October 20,
2004, the Respondent wrote to the Union, restating its position that the Respondent had
reserved the right to make changes to the Beneflex Plan, and that the Respondent had
consistently taken this position the past few years (Jt. Exh. 49).

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On January, 1, 2005, the Respondent implemented changes to the Beneflex Plan for the
DuPont bargaining unit employees. The Union requested to bargain over these changes, but
the Respondent did not offer to, nor did it, negotiate over these changes. In short, following the
expiration of the collective bargaining agreement in 2002, the Respondent implemented
changes to the Beneflex Plan, including the Beneflex Medical Plan in 2003, 2004, and 2005
without bargaining with the Union.

In sum, for a period, from 1994 to 2001, during the existence of successive collective
bargaining agreements, the parties had agreed that the Respondent would make annual
changes to the Beneflex Plan, including the Beneflex Medical Plan. Indeed, by the terms of the
Beneflex Plan and the Beneflex Medical Plan the Respondent had reserved the right to make
changes. Following the expiration of the bargaining agreement, the Respondent rejected the
Union’s repeated demands to bargain over any changes to these plans.

On January 2, 2004, the Union filed the charges in Case 9-CA-40777, giving rise to the
instant complaint, challenging the Respondent’s unilateral changes implemented on January 1,
2004 and those implemented on January 1, 2005.

Analysis

The General Counsel and the Union argue that the Respondent’s unilateral changes to
the Beneflex Plan were lawful during the term of the bargaining agreement, because the parties
had agreed, but when the agreement expired, so did the Union’s consent to any further
unilateral changes. The Respondent argues that the parties agreed that “management would
honor the terms and conditions of contract day-to-day until something different was bargained”,
and that, in any case, the changes were authorized by past practice.

Section 8(a)(5) of the Act establishes an employer’s duty to bargain collectively with the
employees’ representative. The parties agree that unilateral changes by an employer during the
course of a collective bargaining relationship concerning matters that are mandatory subjects of
bargaining are usually considered a refusal to bargain. NLRB v. Katz, 369 U.S.736 (1962). It
also not disputed that health insurance and medical benefits are mandatory subjects of
bargaining. Mid-Continent Concrete, 336 NLRB 258 (2001), enf’d. 308 F.3d 859 (8th Cir. 2002).
Accordingly, without the Union’s consent, health care benefits cannot lawfully be changed. And
a union’s waiver of its bargaining rights must be clear and unmistakable. Metropolitan Edison
Co. v. NLRB, 460 U.S. 693, 702 (1983).

Here, the expired contract contained a management rights provision which operates as a
waiver of the Union’s bargaining rights as to mandatory subjects and which authorized the
Respondent to implement the annual changes. However, such provisions usually terminate with
the expiration of the contract. In Register-Guard, 339 NLRB 353, 355 (2003), the Board stated
that a “contractual reservation of managerial discretion, like the provision relied on by the
Respondent, does not survive expiration of the contract that contains it, absent evidence that
the parties intended it to survive,” citing Ironton Publications, Inc., 321 NLRB 1048 (1996) and
Blue Circle Cement Co., Inc., 319 NLRB 954 (1995). More recently, the Board reaffirmed that
principle in Long Island Head Start Child Development Services, 345 NLRB No. 74 (September
29, 2005). There the Board similarly stated: “A contractual reservation of management rights
does not extend beyond the expiration of the contract in the absence of the parties’ contrary
intentions.” Here, there is no clear evidence that the parties had expressed such intentions.
Instead, the Respondent has taken the position that its agreement, namely, “management
would honor the terms and conditions of contract day-to-day until something different was

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bargained,” as implying that the terms of the contract continued in effect, thereby maintaining
the status quo between the parties.

The record supports that notion. The Respondent’s changes in the Beneflex Plan,
including the Beneflex Medical Plan, for the duration of the collective bargaining agreements
from 1995 to 2002, affected both, the represented and also the nonrepresented employees. In
some years, medical premiums increased, but other benefits showed decreases in premiums,
as for example in 2001, premiums for dependent life insurance and for accidental death
insurance were decreased. In 2000, the annual changes included decreases in premiums for
vision coverage. And the 1999 changes included reductions in deductibles for medical care
options A and B. These examples and others are indicative that the unilateral changes made by
DuPont to the many benefit packages under the Beneflex Plan often benefited the employees.
The changes were implemented annually at the beginning of the year with advance notice to the
Union and to the employees. There is also no evidence that the Respondent abused its rights
to effectuate changes in the Beneflex Plan during the life of the collective-bargaining agreement
to the detriment of the unit employees, or that the implemented changes after the expiration of
the contract deviated from the established pattern.

Under these circumstances, I find two recent Board decisions to be most relevant,
Courier-Journal, 342 NLRB No. 113 (September 17, 2004), and Courier-Journal, 342 NLRB No.
118 (September 22, 2004). In the former case, referred to as Courier- Journal I, the Board under
a factual scenario similar to the one here, decided that the Respondent had not violated the Act,
because the union’s acquiescence in past unilateral action by the employer had established a
past practice. The Board emphasized that in so holding, it did “not pass on the legal issue of
whether a contractual waiver of the right to bargain survives the expiration of the contract,” and
that its “decision is not grounded in waiver,” but that it “is grounded in past practice, and the
continuation thereof.” In the second case, the Board succinctly restated its holding applicable to
both cases as follows:

There (Courier- Journal I), as here, the Respondent’s collective- bargaining
agreement (with a different union) authorized the Respondent to change the
costs and benefits of the health care plan for bargaining unit employees
unilaterally, on the same basis as for nonrepresented employees. There, as
here, the Respondent made numerous unilateral changes in the health care plan,
both during the term of the agreement and during the hiatus periods between
contracts, without opposition from the Union. In these circumstances, we find, as
we did in Courier-Journal I, that the Respondent’s practice has become an
established term and condition of employment, and therefore that the
Respondent did not violate Section 8(a)(5) when it acted consistently with that
practice by making further unilateral changes.

The General Counsel and the Charging Party properly point out that the unilateral
changes made by the Respondent, unlike those in Courier-Journal, were made only during the
life of the contract and never during a contract hiatus period. To be sure, that is a valid
distinction and that is the only factor which detracts from the full precedential value of the
decisions. In my opinion, that difference would clearly be relevant if the Board’s holding were
based on a waiver theory, because there the union failed to challenge the unilateral changes
during the hiatus period. As already stated, however, the Board emphasized that its holding
was based on past practice, and concluded that the respondent’s practice had become an
established term and condition of employment. Arguably, an established past practice could be
considered a form of a waiver, and it is not clear if the Board would have come to the same
conclusion, had it not been for the hiatus period. In Larry Geweke Ford, 344 NLRB No. 78 (May

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12, 2005), the Board addressed the issue, while commenting on its holdings in Courier-Journal,
stating that the “prior acquiescence of the charging party union is not invariably a requisite
element in the past practice analysis” (at fn.1). There, the Board held that providing the same
health plan for all its employees on a company-wide basis was insufficient to exempt it from the
bargaining obligation, unless an employer can “claim that it had an established past practice of
making regular annual changes in premium amounts or other aspects of the health coverage of
its employees.”

Here, the Respondent implemented the unilateral changes routinely from January 1,
1996 and every year thereafter until January 1, 2002, a seven year period, with reasonable
certainty, not more frequently than once a year. The Union was always notified in the fall of the
preceding year and presented with a summary of changes, including increases in premiums, if
any. The Respondent mailed the “Pain Talk” publication to all participants in the Beneflex Plan.
The changes were predictably implemented each year on the first of January. The record does
not suggest that any unilateral changes, implemented during the life of the contract or
thereafter, were made arbitrarily or on an ad hoc basis to the disadvantage of the represented
employees. Moreover, when the bargaining representatives for the respective parties began
negotiations for a successor contract in 2002, the parties agreed that the Respondent would
honor the terms and conditions of the contract until something different was bargained.
Although required by law, according the General Counsel, that agreement has maintained the
working conditions of the unit employees and the respective positions between the parties until
they negotiate a mutually agreeable understanding as to the Respondent’s rights to effectuate
changes to its Beneflex Plan, including the Beneflex Medical Plan.

Mindful of the positions so forcefully argued by the General Counsel and particularly, the
Charging Party, that the prior agreement did not automatically renew, and that the Union’s
consent had expired following the expiration of the contract, I have some reservation. However,
I find that the Courier-Journal decisions are most closely analogous to the case before me.
There, as here, the Respondent established a several year routine amounting to a past practice
which survived the contract and maintained the status quo. Unlike the employer in Long Island
Head Start Child Development Services, Inc., 345 NLRB No. 74 (at fn. 5), I find (in the words of
the Board) that the Respondent has “demonstrated an established past practice of exercising its
own discretion in changing its health care plan.”

Conclusions of Law

1. The Respondent, E.I. du Pont de Nemours, Louisville Works, is an employer engaged in
commerce within the meaning of Section 2(2), (6), and (7) of the Act.

2. The Union is a labor organization within the meaning of Section 2(5) of the Act.

3. The Respondent’s unilateral changes to the Beneflex Plan following the expiration of the
collective-bargaining agreement did not violate Section 8(a)(5) of the Act, because the conduct
was consistent with a lawful, established past practice.

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On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended2
ORDER

The complaint is dismissed.

Dated, Washington, D.C., December 1500, 2005.

Karl H. Buschmann
Administrative Law Judge
2 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and Regulations,
the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the
Rules, be adopted by the Board and all objections to them shall be deemed waived for all
purposes.