KSM Industries Inc.

National Labor Relations Board - Board Decisions

Aug 1, 2002

337 N.L.R.B. 987 (N.L.R.B. 2002)

KSM INDUSTRIES INC. 987
KSM Industries Incorporated and United Paper-
workers International Union, Local 7779, AFL–
CIO, CLC. Cases 30–CA–13762, 30–CA–14008,
and 30–CA–14101
August 1, 2002
ORDER GRANTING MOTION FOR
RECONSIDERATION
BY CHAIRMAN HURTGEN AND MEMBERS LIEBMAN,
COWEN, AND BARTLETT
On September 28, 2001, the National Labor Relations
Board issued a Decision and Order1 in this proceeding
finding, inter alia, that the Respondent violated Section
8(a)(5) and (1) of the Act, by unilaterally implementing
its health insurance proposal, after reaching impasse. In
finding this violation, the Board relied on McClatchy
Newspapers, 321 NLRB 1386 (1996), enfd. 131 F.3d
1026 (D.C. Cir. 1997).
On October 19, 2001, the Respondent filed a Motion
for Reconsideration, asserting that, with respect to the
unilateral implementation of the medical and dental in­
surance proposal, the Board made “de novo findings
and/or conclusions with regard to material facts” that are
“erroneous as either unsupported by any record evidence
or contrary thereto.” The General Counsel filed an oppo­
sition to the motion.
We grant the motion only insofar as we shall delete the
last two sentences of the penultimate paragraph of the
decision.2
In all other respects, the Board denies the motion as
lacking merit. Section 102.48(d)(1) of the Board’s Rules
and Regulations permits a party in “extraordinary cir­
cumstances” to move for reconsideration, rehearing, or
reopening of the record after a Board decision or Order
issues. There are no such extraordinary circumstances
here. In this regard, we note that the Respondent, in its
Motion for Reconsideration, does not attack the validity
of McClatchy Newspapers, supra, or its application to the
instant case. Indeed, the Respondent does not even seek
reversal of the Board’s conclusions of law in the instant
case. Also, most assuredly, the Respondent does not
make the argument that is made by our dissenting col­
league. In these circumstances, we find that there are no
1 336 NLRB 133 (2001).
2 Chairman Hurtgen and Member Bartlett agree that the deleted sen­
tences refer to “material facts” within the meaning of Sec. 102.48(d)(1),
in the sense that these facts are relevant to the case. However, for the
reasons indicated herein, we do not consider the matter to be so “ex­
traordinary” as to warrant a reconsideration of the ult imate result.
Member Liebman, the sole Member of the current Board who did par­
ticipate in the underlying case, joins her colleagues in granting the
motion. She also disagrees with her dissenting colleague for the rea­
sons described in her concurring opinion.
“extraordinary circumstances” to warrant reversal of the
conclusions of law or adoption of the argument of the
dissent.3
Accordingly, the Board having duly considered the
matter,
IT IS ORDERED that the Respondent’s motion is granted,
as described above.
MEMBER LIEBMAN, concurring.
Because of changes in the Board’s composition, this
case places us in an awkward position. The result is a
somewhat unusual disposition of the Respondent’s mo­
tion for reconsideration, which leaves the Board’s origi­
nal decision unaffected in any significant way–and still
correct in finding a violation of Section 8(a)(5). I join in
the Board’s ruling. I write separately (1) to emphasize
my own view that the sentences deleted from the Board’s
decision are not necessary to its rationale, and (2) to dis­
agree with Member Cowen’s view that there was no vio­
lation of Section 8(a)(5) here.
Of the three Board Members on the original panel
(Member Truesdale, Member Walsh, and myself) that
decided this case on September 28, 2001, only I remain
on the Board to join in ruling on the Respondent’s mo­
tion for reconsideration of the panel’s decision. Two of
my colleagues, Chairman Hurtgen and Member Bartlett,
who are new to the case and in one instance new to the
Board,1 have acted on the motion, but have expressed no
views regarding the Board’s decision. This is the course
I would follow, were I placed in their position. In the
interests of finality and administrative economy, motions
for reconsideration are disfavored. Those interests strike
me as especially strong when the composition of the
Board has changed substantially in between the time a
decision is issued and the time a motion for reconsidera­
tion is made. Indeed, reconsidering cases in these cir­
cumstances may even invite motions for reconsideration,
if losing parties believe that new Board Members may be
more sympathetic to their positions. Accord Iron Work­
ers Local 471 (Wagner Iron Works), 108 NLRB 1236,
1239 (1954) (Board will not entertain motion for recon­
sideration based solely on change in Board membership).
Member Cowen has nonetheless chosen to revisit the
merits of the Board’s original decision, and that is his
prerogative. In his view, “absent a finding that the Re­
spondent’s April 11 letter to the Union presented the
changes as a fait accompli, there is no violation of Sec­
tion 8(a)(5).” A sentence describing the Respondent’s
3 Chairman Hurtgen and Member Bartlett did not participate in the
underlying case and they express no views regarding the Board’s deci­
sion.
1 Member Bartlett, as well as Member Cowen, received a recess ap­
pointment to the Board on January 22, 2002.
337 NLRB No. 156
988 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
actions of April 11 as a “fait accompli” has now been
deleted from the Board’s decision, though the Board’s
Order does not describe the sentence as “materially erro­
neous” (as Member Cowen suggests).2 That deletion is
immaterial because there is no basis here for concluding,
as Member Cowen does, that the Union waived its right
to bargain. The Respondent has never argued as much.
Nor do the facts support such an argument.
The Board has determined that “the Respondent an­
nounced its intention to implement, and in fact did im­
plement, the [medical and dental insurance] proposal.”
336 NLRB 133, 135 (2001). Based on the McClatchy
Newspapers decision,3 the Board has also determined
that this proposal could not be lawfully implemented,
even following a lawful impasse, because the proposal
gave the Respondent so much discretion that it “nullified
the Union’s authority to bargain over the terms of a key
term and condition of employment.” Id. (footnote omit­
ted). The violation of Section 8(a)(5) here follows di­
rectly from the nature of the Respondent’s proposal and
its implementation.
Member Cowen regards the Respondent’s April 11 let­
ter, transmitting a list of changes in health insurance
benefits in line with the proposal, as if it were the pro­
posal itself, to which the Union was obliged to respond
(or, by failing to respond, waive its right to bargain). But
the Union already had bargained, to impasse, over the
proposal, which the Respondent then proceeded to im­
plement, according to its terms. The April 11 letter was
itself part of the implementation of the proposal, not a
step preliminary to implementation (as Member Cowen
treats it).
As the Board’s decision (still) observes, the proposal
called for “discussions” with the Union over insurance
matters, but the testimony of the Respondent’s own offi­
cial established that, by this, the Respondent did not con-
template actual bargaining. Under these circumstances,
the Respondent’s invitation “to discuss this matter”
clearly was not a new invitation to bargain, and it trig­
gered no duty to respond on the Union’s part. The Board
has found no waiver in analogous situations where a
meaningful union role in bargaining was foreclosed.4
2 A second sentence (“The Respondent admittedly did not even dis­
cuss these matters with the Union beforehand.”) has also been deleted,
but Member Cowen does not argue that this specific deletion matters.
3 McClatchy Newspapers, 321 NLRB 1386 (1996), enfd. 131 F.3d
1026 (D.C. Cir. 1997).
4 See, e.g., Pontiac Osteopathic Hospital, 336 NLRB 1021, 1023
(2001) (employer’s letter of intent to unilaterally implement wage and
benefit revisions simply informed the union about decision); Defiance
Hospital, 330 NLRB 492, 493 (2000) (employer’s letter announced
decision to make future changes and invited union representatives to
contact employer within 7 days, if they had objections or questions);
None of the cases cited by Member Cowen, meanwhile,
involve the implementation of a McClatchy Newspapers
type proposal, following an impasse in bargaining. In its
current form, then, the Board’s decision amply sets out a
basis for finding a violation of Section 8(a)(5), consistent
with McClatchy Newspapers, as extended to a health
insurance proposal.5
MEMBER COWEN, dissenting.
Contrary to my colleagues, who grant the Respon­
dent’s Motion for Reconsideration for the limited pur­
pose of deleting two materially erroneous sentences from
the Board’s decision in KSM Industries, 336 NLRB 133
(2001), I would grant the Respondent’s motion and re-
verse the Board’s finding in that decision that the Re­
spondent’s unilateral implementation of its medi­
cal/dental proposal (“health insurance proposal”) violated
Section 8(a)(5) of the Act. KSM Industries, supra, slip
op. at 2–3.
In KSM Industries, supra, the Board found, inter alia,
that the parties bargained to impasse over the Respon­
dent’s health insurance proposal.1 The legality of the
Keystone Consolidated Industries, 309 NLRB 294, 297 (1992) (em­
ployer had taken position that unilateral change in pension plan admini­
stration was not mandatory subject of bargaining), enf. denied on other
grounds 41 F.3d 746 (D.C. Cir. 1994).
5 Member Cowen has chosen not to address this aspect of the
Board’s decision.
1 The proposal, which was a component of the Respondent’s Welfare
Benefits proposal, states, in relevant part:
Section 3. Medical/Hospital and Dental
(A) Eligible regular full-time employees are eligible for the medi­
cal/hospital and the dental benefits provided by the Company.
(B) During the term of this Agreement, the Company and the em­
ployee will share in paying for the entire cost of the medi­
cal/hospital and the dental benefits on a contribution ratio of
eighty (80%) percent for the Company and twenty (20%) per-
cent for the employee. Provided, the employee will not pay
more than the following amounts for the applicable category
during the term of this Agreement:
Single — $40 per month.
Limited — $80 per month.
Family — $130 per month.
If the Company provides these benefits on a self-funding basis,
then the cost is computed from the COBRA rates provided by the
Plan Administrator.
(C) During the months of April, 1997 the employees will be provided
an “open enrollment” period for the medical/hospital and the den­
tal benefits. . . . .
(D) During the term of this Agreement and for cost containment pur­
poses, the Company may change the method and/or means for
providing for the medical/hospital and the dental benefits, which
includes, the plan design, the level of the benefits and the admini­
stration thereof; provided, the change is applied on a Company-
wide basis, the change is first discussed with the Union, and any
KSM INDUSTRIES INC. 989
impasse, which the Respondent declared in its implemen­
tation/impasse letter of March 17, 1997,2 was not in dis­
pute. Notwithstanding this lawful impasse, the Board,
relying on McClatchy Newspapers, 321 NLRB 1386
(1996), enfd. 131 F.3d 1026 (D.C. Cir. 1997), found the
Respondent’s implementation of its health insurance pro­
posal to be unlawful.3
On October 19, 2001, the Respondent filed a Motion
for Reconsideration.4 In its motion, which raises issues
relating to the above-mentioned finding that the Respon­
dent violated Section 8(a)(5) by unilaterally implement­
ing its health insurance proposal, the Respondent asserts
that, “[I]n the section of [KSM Industries, supra] entitled,
‘Unilateral Implementation of Health Insurance Pro­
posal,’ the Board made . . . de novo findings and/or
conclusions with regard to material facts. . . . These
findings are materially erroneous as either unsupported
by any record evidence or contrary thereto.”
Specifically, the Respondent contends that the following
findings in KSM Industries, supra at 135, are “materially
erroneous as either unsupported by any record evidence
or contrary thereto”:
1. “Indeed, on April 11, when the Respondent transmit­
ted a list of changes in health insurance benefits to
the Union, including increases in deductibles and
out-of pocket expenses, the changes were presented
as a fait accompli.”
2. “The Respondent admittedly did not even discuss
these matters with the Union beforehand.”
By granting the Respondent’s motion, my colleagues
agree that these findings were materially erroneous, i.e.,
they were either unsupported by the record or contrary to
the record. However, based on their view that the Re­
deductibles and coinsurance limits for the medical/hospital benefit
will not exceed [certain specified amounts].
The Board found that this proposal (specifically, the language in sec. 3(D)),
was “akin” to the merit wage proposal in McClatchy Newspapers, supra,
and was, therefore, unlawful. KSM Industries, supra at 135.
2 All dates refer to 1997 unless otherwise indicated.
3 In light of my rationale for reversing this violation, as discussed be-
low, I find it unnecessary to address the Board’s application of
McClatchy Newspapers, supra, to the Respondent’s health insurance
proposal in KSM Industries, supra, or the validity of McClatchy News-
papers.
4 Sec. 102.48(d)(1) of the Board’s Rules and Regulations states, inter
alia:
A party to a proceeding before the Board may, because of extraordi­
nary circumstances, move for reconsideration, rehearing, or reopening
of the record after the Board decision or order. A motion for recon­
sideration shall state with particularity the material error claimed and
with respect to any finding of material fact shall specify the page of
the record relied on.
spondent’s motion did not request—or does not invite—
any changes to the Board’s conclusions of law or its Or­
der, they refuse to reconsider the merits of the Board’s
finding that the Respondent violated Section 8(a)(5) by
unilaterally implementing its health insurance proposal.
Thus, they simply delete the offending sentences without
disturbing that ultimate finding.5
I join my colleagues in deleting the above-quoted sen­
tences from KSM Industries, supra. But, unlike my col­
leagues, I believe that the Respondent’s motion can rea­
sonably be read as giving the Board grounds for recon­
sidering the merits of the finding that the Respondent
violated Section 8(a)(5) by unilaterally implementing its
health insurance proposal. In its motion, the Respondent
requested the Board to reconsider the above-quoted find­
ings of fact, “and to issue an Order either expunging the
findings of fact or correcting the same to properly reflect
the record evidence.” Unlike my colleagues, who read
the removed language as if it exists in a vacuum, sealed
off from its effect on the validity of the 8(a)(5) violation,
I see the removed language as bound up with, and central
to, this violation. In my view, the removed language
cannot be separated from the violation itself; that is, as I
explain below, if the Respondent did not present the
changes in the health insurance plan to the Union as a
fait accompli (and my colleagues, in granting the Re­
spondent’s Motion, concede that it did not), a finding
that the Respondent violated Section 8(a)(5) by unilater­
ally implementing the health insurance plan cannot fol­
low under applicable Board law. A material error of this
sort—i.e., the type of error that, if corrected, would
eliminate an essential factual foundation supporting a
violation—raises the sort of “extraordinary circum­
stance” necessary to reconsider the merits of that viola­
tion under Section 102.48(d)(1) of the Board’s Rules and
5 Member Liebman invokes “the interests of finality and administra­
tive economy” as reasons for not reconsidering the merits of the 8(a)(5)
allegation at issue. I agree that those considerations are especially
important in the context of deciding motions for reconsideration. How-
ever, in my view, the greater benefit of rectifying an erroneous finding
of a violation outweighs those considerations in these circumstances.
Member Liebman cites Iron Workers Local 471 (Wagner Iron
Works), 108 NLRB 1236, 1239 (1954), for the proposition that the
“Board will not entertain [a] motion for reconsideration based solely on
change in Board membership.” Member Liebman fails to note, how-
ever, that the instant motion for reconsideration is not based upon any
change in the Board. Rather, the motion is based upon a material fac­
tual error in the Board’s original decision in this matter, an error which
the Board is not correcting notwithstanding the recent change in Board
configuration. I differ from my colleagues in that I would also correct
the erroneous finding of a violation which flowed from this material
factual error. Simply stated, Wagner Iron Works does not hold that a
reconfigured Board may not reconsider an erroneous finding of a viola­
tion; it only holds that a change in Board membership should not be the
basis for granting a motion for reconsideration.
990 DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Regulations. In sum, the merits of this 8(a)(5) violation
are properly before the Board for reconsideration.6
The relevant facts regarding the Board’s finding that
the Respondent violated Section 8(a)(5) by unilaterally
implementing its health insurance proposal are these. On
April 11, the Respondent sent a letter to the Union noti­
fying it of changes to the Respondent’s health insurance
plan that were to be retroactive to April 1. The cover
letter, which was signed by Administrative Manager
David Oechsner, stated:
Enclosed is information relative to the medical
and dental plan and changes that are to be retroactive
to April 1, 1997. This information will be mailed by
the end of next week to all KSM employees who are
currently participating in the KSM health and dental
benefit program.
Please contact me if you wish to discuss this mat­
ter.
The letter contained attachments (which were to be mailed
by the end of the next week) advising employees “of
changes that have been made to [the Respondent’s] Health
and Dental Benefit Package [e]ffective April 1, 1997.”
In adopting the judge’s finding that the Respondent
violated Section 8(a)(5) by implementing these changes
on April 11 (retroactive to April 1), the Board stated,
inter alia, that the above-quoted letter to the Union pre­
sented the changes to the health insurance plan “as a fait
accompli.” KSM Industries, supra at 135. As stated
above, in granting the Respondent’s motion, my col­
leagues have deleted, inter alia, this finding.
In my view, absent a finding that the Respondent’s
April 11 letter to the Union presented the changes as a
fait accompli, there is no violation of Section 8(a)(5)
here. “It is settled Board law that ‘[W]hen an employer
notifies a union of proposed changes in terms and condi­
tions of employment, it is incumbent upon the union to
act with due diligence in requesting bargaining.” Had-
don Craftsmen, 300 NLRB 789, 790 (1990), rev. denied
mem. sub nom. Graphic Communications Workers Local
97B v. NLRB, 937 F.2d 597 (3d Cir. 1991) (citations
6 Member Liebman contends that the Board’s Order does not de-
scribe the above-quoted “fait accompli” sentence as materially errone­
ous, and that the deletion of that sentence is, in any event, “immaterial.”
I fail to see how this can be so, especially in light of the fact that my
colleagues have granted the Respondent’s motion (albeit for a limited
purpose).
As I have stated above, a finding that the Respondent presented the
proposal as a “fait accompli” is, in my view, an essential ingredient of
this 8(a)(5) violation. Furthermore, the Respondent’s motion requests
the Board to delete two “materially erroneous” findings. Also, Sec.
102.48(d)(1) of the Board’s Rules and Regulations refers to “material
error[s] and “material fact[s].” By granting the motion, my colleagues
have implicitly found that the deleted findings are, indeed, “material.”
omitted). In this regard, “a union which receives timely
notice [of a proposed change to terms and conditions of
employment] must take advantage of that notice if it is to
preserve its bargaining rights. . . . Such a failure of
prosecution constitutes a waiver of a union’s right to
bargain.” Medicenter, Mid-South Hospital, 221 NLRB
670, 679 (1975).
Further,
it is not unlawful for an employer to present a proposed
change in terms and conditions of employment as a
fully developed plan or to use positive language to de-
scribe it. In short, when a union receives notice that a
change in terms and conditions of employment is con­
templated, it must fulfill its obligation to request
bargaining over the change or risk a finding that it has
lost its right to bargain through inaction and, as a
consequence, risk the dismissal of 8(a)(5) allegations
because no objective basis exists to find or infer bad
faith on the part of the employer.
Haddon Craftsmen, supra at 790–791 (citations omitted).
The Board has held that as little as 2 days’ notice to a union
may fulfill an employer’s bargaining obligation. Shell Oil
Co., 149 NLRB 305 (1964). See also Clarkwood Corp.,
233 NLRB 1172 (1977), enfd. mem. 586 F.2d 835 (3d Cir.
1978) (5 days’ notice sufficient); and Haddon Craftsmen,
supra (5 days’ notice sufficient).
The Respondent did not present its changes to the
health insurance plan as a fait accompli in its April 11
letter. First, the letter explicitly invited the Union to con-
tact Oechsner “to discuss this matter.” This demo n­
strates that the letter constituted an announcement of
proposed changes that were still open to negotiation.
And, second, the record reflects that the Respondent ap­
parently did not actually implement these changes until
May 1, approximately 3 weeks later. This intervening
period between the date of the letter and the date of the
actual implementation of the changes presented the Un­
ion with ample time to request the Respondent to negoti­
ate about the changes. The Union’s failure to do so con­
stituted a waiver of its right to bargain about these
changes.7 Accordingly, I would reverse the finding in
7 The three cases which Member Liebman contends are “analogous”
to the instant 8(a)(5) violation are, in fact, readily distinguishable.
First, in Defiance Hospital, 330 NLRB 492, 493 (2000), the Board
found that the employer presented the unions with a “fait accompli”
wage increase implementation based on, inter alia, the fact that, “al­
though [the employer’s] letter to the Unions purported to give them 7
days to respond . . . there was no meaningful opportunity for bargaining
because [the employer] simultaneously issued a letter to employees
announcing a wage increase.” Id. (Emphasis added.) In the instant
case, however, the Respondent’s letter to the Union stated that the
information regarding the changes to the health insurance plan “will be
KSM INDUSTRIES INC. 991
mailed by the end of next week to all KSM employees who are cur­
rently participating in the KSM health and dental benefit program.”
Thus, there was no simultaneous transmission of correspondence; and,
in light of the fact that the Respondent apparently did not implement
the changes until May 1 (approximately 3 weeks after the letter was
sent to the Union), the Union had sufficient time to request bargaining.
Second, in Pontiac Osteopathic Hospital, 336 NLRB 1021, 1023
(2001), the Board majority adopted, inter alia, the judge’s finding that,
although the Union made a timely request to bargain with the employer
about the employer’s paid time off (PTO) policy proposal, the em­
ployer ignored its request. Here, of course, the Union did not request
the Respondent to bargain about the proposed April 11 changes to the
health insurance plan. Although the judge in Pontiac Osteopathic
Hospital found it unnecessary to pass on the contention that the em­
ployer presented its proposed change regarding the PTO policy to the
Union as a “fait accompli,” the Board nonetheless chose to address that
issue. Id. It found that the employer presented its PTO proposal to the
Union as “a decision that it had already implemented.” Id. Here, how-
ever, the Respondent, in its letter to the Union, expressly invited the
Union to “discuss” the changes. And, as stated above, there was, ap­
parently, a 3-week period between the Respondent’s letter and the date
KSM Industries, supra, that the Respondent violated Sec­
tion 8(a)(5) by unilaterally implementing its health insur­
ance proposal.
on which it implemented the changes. In short, the “unequivocal lan­
guage” that the employer in Pontiac Osteopathic Hospitalused regard­
ing its implementation is lacking here. Id. Thus, the Respondent’s
conduct cannot reasonably be likened to the employer’s conduct in
Pontiac Osteopathic Hospital.
Finally, in Keystone Consolidated Industries, 309 NLRB 294
(1992), revd. and remanded 41 F.3d 746 (D.C. Cir. 1994), the Board
found, inter alia, that the employer presented the Union with “fait ac­
compli” changes to a pension plan. In reaching this conclusion, the
Board relied on, first, the fact that the employer “consistently” main­
tained that any change in administration of the pension plan was not
subject to mandatory bargaining; and, second, the fact that the em­
ployer was not “amenable” to bargaining about the change with the
Union. Id. at 297. Here, the evidence does not show that the Respon­
dent would not have been amenable to bargaining. In this regard, the
Respondent did not contend that the health insurance plan was not a
mandatory subject of bargaining. And, as stated above, its letter to the
Union presented the Union with adequate time to request bargaining.