Milwaukee Spring Division

National Labor Relations Board - Board Decisions

Jan 23, 1984

268 N.L.R.B. 601 (N.L.R.B. 1984)

MILWAUKEE SPRING DIVISION
Milwaukee Spring Division of Illinois Coil Spring
Company and International Union, United
Automobile, Aerospace & Agricultural Imple-
ment Workers of America (UAW), and its Local
547. Case 30-CA-7067
23 January 1984
SUPPLEMENTAL DECISION AND
ORDER
On 22 October 1982 the National Labor Rela-
tions Board issued its Decision and Order' in this
proceeding, finding that Respondent had engaged
in unfair labor practices in violation of Section
8(a)(l), (3), and (5) and Section 8(d) of the National
Labor Relations Act, as amended. The Board held
that Respondent violated the Act by deciding with-
out the Union's consent to transfer its assembly op-
erations from its unionized Milwaukee Spring facil-
ity to its unorganized McHenry Spring facility
during the term of a collective-bargaining agree-
ment because of the comparatively higher labor
costs under the agreement, and to lay off unit em-
ployees as a consequence of that decision. Re-
spondent filed a petition for review of the Board's
Decision and Order with the United States Court
of Appeals for the Seventh Circuit, and the Board
filed a cross-application for enforcement of its
Order. On 4 August 1983 the court granted the
Board's motion to remand this case to the Board
for additional consideration.
On 18 August 1983 the Board scheduled oral ar-
gument for 20 September 1983 because this and an-
other case2 presented important issues in the ad-
ministration of the National Labor Relations Act.
On the scheduled date, Respondent, the General
Counsel, the Charging Party, the American Feder-
ation of Labor and Congress of Industrial Organi-
zations, and the Chamber of Commerce of the
United States of America presented oral argument
before the Board.3
The Board has reconsidered its Decision and
Order in light of the entire record and the oral ar-
guments and has decided to reverse that decision
and dismiss the complaint.
1. FACTUAL BACKGROUND
Illinois Coil Spring Company consists of three
divisions-Holly Spring, McHenry Spring, and Re-
spondent (Milwaukee Spring). The parties stipulat-
ed that, although collectively the four entities are a
265 NLRB 206 (Milwaukee Spring I).
Echlin. Inc.., Case 7-CA-21616.
3 The American Federation of Labor and Congress of Industrial Orga-
nizations and the Chamber of Commerce of the United States of America
appeared as amici curiae.
268 NLRB No. 87
single employer, each location constitutes a sepa-
rate bargaining unit.
Respondent, at material times, employed about
99 bargaining unit employees. These employees
worked in eight departments, including an assem-
bly operations department and a molding oper-
ations department.
The Union has represented Respondent's bar-
gaining unit employees for a number of years. The
most recent contract became effective on I April
1980, and remained in effect until at least 31 March
1983. The contract contains specific wage and ben-
efits provisions. The contract also provides that the
Company "recognizes the Union as the sole and ex-
clusive collective bargaining agent for all produc-
tion and maintenance employees in the Company's
plant at Milwaukee, Wisconsin."
On 26 January 19824 Respondent asked the
Union to forgo a scheduled wage increase and to
grant other contract concessions. In March, be-
cause Respondent lost a major customer, it pro-
posed to the Union relocating its assembly oper-
ations to the nonunionized McHenry facility, locat-
ed in McHenry, Illinois, to obtain relief from the
comparatively higher assembly labor costs at Mil-
waukee Spring. Respondent also advised the Union
that it needed wage and benefit concessions to keep
its molding operations in Milwaukee viable. On 23
March the Union rejected the proposed reduction
in wages and benefits. On 29 March Respondent
submitted to the Union a document entitled
"Terms Upon Which Milwaukee Assembly Oper-
ations Will Be Retained in Milwaukee." On 4 April
the Union rejected the Company's proposal for al-
ternatives to relocation and declined to bargain fur-
ther over the Company's decision to transfer its as-
sembly operations. The Company then announced
its decision to relocate the Milwaukee assembly op-
erations to the McHenry facility.
The parties stipulated that the relocation decision
was economically motivated and was not the result
of union animus. The parties also stipulated that
Respondent has satisfied its obligation to bargain
with the Union over the decision to relocate the as-
sembly operations and has been willing to engage
in effects bargaining with the Union.5
4 All dates hereinafter refer to 1982, unless otherwise indicated.
5 The parties' stipulation and the manner in which they briefed this
case treat Respondent's relocation decision as a mandatory subject of bar-
gaining. The dissent nevertheless insists on discussing at length what it
terms the "threshold issue" of whether Respondent had a duty to bargain
over its decision. Based on the facts before us, we find no reason to enter
this discussion. We do not find it necessary to decide whether the work
relocation here was a mandatory subject of bargaining under the Su-
preme Court's decision in First National Corp. v. NLRB, 452 U.S. 666
(1981).
601
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
II1. MIDTERM MODIFICATION OF CONTRACTS UNDER
SECTION 8(D)
A.
Sections 8(a)(5) and 8(d) establish an employer's
obligation to bargain in good faith with respect to
"wages, hours, and other terms and conditions of
employment." Generally, an employer may not
unilaterally institute changes regarding these man-
datory subjects before reaching a good-faith im-
passe in bargaining.6 Section 8(d) imposes an addi-
tional requirement when a collective-bargaining
agreement is in effect and an employer seeks to
"modif[y] . . . the terms and conditions contained
in" the contract: the employer must obtain the
union's consent before implementing the change.7
If the employment conditions the employer seeks
to change are not "contained in" the contract,
however, the employer's obligation remains the
general one of bargaining in good faith to impasse
over the subject before instituting the proposed
change.
Applying these principles to the instant case,
before the Board may hold that Respondent violat-
ed Section 8(d), the Board first must identify a spe-
cific term "contained in" the contract that the
Company's decision to relocate modified. In Mil-
waukee Spring I, the Board never specified the con-
tract term that was modified by Respondent's deci-
sion to relocate the assembly operations. The
Board's failure to do so is not surprising, for we
have searched the contract in vain for a provision
requiring bargaining unit work to remain in Mil-
waukee.
Milwaukee Spring I suggests, however, that the
Board may have concluded that Respondent's relo-
cation decision, because it was motivated by a
desire to obtain relief from the Milwaukee con-
tract's labor costs, modified that contract's wage
and benefits provisions.8 We believe this reasoning
is flawed. While it is true that the Company pro-
posed modifying the wage and benefits provisions
of the contract, the Union rejected the proposals.
Following its failure to obtain the Union's consent,
Respondent, in accord with Section 8(d), aban-
doned the proposals to modify the contract's wage
and benefits provisions. Instead, Respondent decid-
ed to transfer the assembly operations to a different
plant where different workers (who were not sub-
ject to the contract) would perform the work. In
short, Respondent did not disturb the wages and
benefits at its Milwaukee facility, and consequently
did not violate Section 8(d) by modifying, without
I See NLRB v. Katz, 369 U.S. 736 (1962).
7 Oak Cliff-Golman Baking Co., 207 NLRB 1063 (1973), enfd. 505 F.2d
1302 (5th Cir. 1974), cert. denied 423 U.S. 826 (1975).
8 See 265 NLRB 206.
the Union's consent, the wage and benefits provi-
sions contained in the contract.9
Nor do we find that Respondent's relocation de-
cision modified the contract's recognition clause. In
two previous cases, the Board construed recogni-
tion clauses to encompass the duties performed by
bargaining unit employees and held that employers'
reassignment of work modified those clauses. In
both instances, reviewing courts found no basis for
reading jurisdictional rights into standard clauses
that merely recognized the contracts' coverage of
specified employees. Boeing Co., 230 NLRB 696
(1977), enf. denied 581 F.2d 793 (9th Cir. 1978);
University of Chicago, 210 NLRB 190 (1974), enf.
denied 514 F.2d 942 (7th Cir. 1975). We agree with
the courts' reasoning.
Language recognizing the Union as the bargain-
ing agent "for all production and maintenance em-
ployees in the Company's plant at Milwaukee, Wis-
consin," does not state that the functions that the
unit performs must remain in Milwaukee. No doubt
parties could draft such a clause; indeed, work-
preservation clauses are commonplace. It is not for
the Board, however, to create an implied work-
preservation clause in every American labor agree-
ment based on wage and benefits or recognition
provisions, and we expressly decline to do so.10
In sum, we find in the instant case that neither
wage and benefits provisions nor the recognition
clause contained in the collective-bargaining agree-
ment preserves bargaining unit work at the Mil-
waukee facility for the duration of the contract,
and that Respondent did not modify these contract
terms when it decided to relocate its assembly op-
erations. Further, we find that no other term con-
tained in the contract restricts Respondent's deci-
sion-making regarding relocation.
I Oak Cliff-Golman illustrates a midterm modification of wage provi-
sions. In that case, the contract contained wage rates that the respondent
unilaterally reduced during the life of the contract. Respondent in the in-
stant case, having unsuccessfully sought the Union's consent to modify
the contractual wages and benefits, left those provisions intact.
Oak Cliff-Golman also discussed the appropriateness of deferral to con-
tractual grievance and arbitration procedures. We need not make any
finding in this case regarding deferral.
io In Boeing, the court stated:
Since the purpose of the Act is to encourage labor/management
peace by resolving differences through collective-bargaining and to
stabilize agreed upon conditions during the term of a [contract], Steel-
workers v. Warrior and Gulf Co., 363 U.S. 574, 578 . . . (1960), a re-
jection of the Board's position here would seem to further the pur-
pose of the Act. Rather than stretching the meaning of a Recogni-
tion Clause "impliedly." "implicitly," or "in effect" to cover "func-
tions" (as did the Board), a decision against the Board would encour-
age the parties affirmatively to negotiate an explicit "Jurisdictional
Clause" to be included in the next [contract]. [581 F.2d at 798.]
602
MILWAUKEE SPRING DIVISION
B."
Our dissenting colleague and the decision in Mil-
waukee Spring I fail to recognize that decision's
substantial departure from NLRB textbook law
that an employer need not obtain a union's consent
on a matter not contained in the body of a collec-
tive-bargaining agreement even though the subject
is a mandatory subject of bargaining.' 2 See, e.g.,
Ozark Trailers, 161 NLRB 561 (1966). Although
the Board found a violation in Ozark, it did so
grounded on the employer's failure to bargain over
its decision to close a part of its operation during
the collective-bargaining agreement, transfer equip-
ment to another of its plants, and subcontract out
work which had been performed at the Ozark
plant. Even though the Board's ultimate conclusion
in that case may not here survive the Supreme
Court's analysis in First National Corp., it is instruc-
tive to note the Board's recognition that the em-
ployer's obligation, absent a specific provision in
the contract restricting its rights, was to bargain
with the union over its decision:
In the first place, however, as we have pointed
out time and time again, an employer's obliga-
tion to bargain does not include the obligation
to agree, but solely to engage in a full and
frank discussion with the collective-bargaining
representative in which a bona fide effort will
be made to explore possible alternatives, if
any, that may achieve a mutually satisfactory
accommodation of the interests of both the
employer and the employees. If such efforts
fail, the employer is wholly free to make and
effectuate his decision. [161 NLRB at 568.
Footnote omitted.]
In Ozark the company closed its plant midterm of
the collective-bargaining agreement, transferred the
equipment, and contracted out the manufacture of
truck bodies formerly performed at the Ozark plant
primarily for labor cost reasons. There was no con-
tention that the employer's action in closing the
plant violated any contractual provision since the
contract itself did not prohibit the closing. It is not
surprising to find the absence of any reference to
Ozark in Milwaukee Spring I or in the dissent here.
Under their erroneous analysis, the company in
Ozark, even if it had bargained with the union over
I In agreeing with her colleagues that Milwaukee Spring I represented
a substantial departure from well-established Board precedent, Member
Dennis relies on part Ill of the decision, and finds it unnecessary to reach
the matters discussed in part II,B.
12 For a comprehensive review of prior decisions in this area, includ-
ing cogent criticism of inconsistency and ambiguities, see Philip A. Misci-
marra. The NLRB and Managerial Discretion: Plant Closings, Relocations.
Subcontracting, and Aurtomation. The Wharton School, University of
Pennsylvania (1983) pp 204-215.
the decision, still could not have closed its plant
given their construction of Section 8(d) of the Act
without the union's consent. Under their view, the
Board's entire discussion and rationale in Ozark
would be irrelevant.
In making its conclusion in Ozark the Board rec-
ognized that it was common practice for unions
and employers to negotiate concerning work relo-
cation, subcontracting, contracting out, etc., and
that such negotiations had resulted in contractual
language in some contracts which restricted the
employer's right to contract out unit work. Conse-
quently, the General Counsel's assertion at oral ar-
gument and the implication of our dissenting col-
league that to reverse Milwaukee Spring I would
change the whole course of collective bargaining
set forth throughout the years of the National
Labor Relations Act is not accurate. Rather, it was
Milwaukee Spring I which was a radical departure,
as a re-reading of Ozark demonstrates:
Thus, a Bureau of Labor Statistics study of
1,687 major collective-bargaining agreements
in effect at the beginning of 1959 shows that
there were 378 with express limitations on
contracting out work that might otherwise be
available to employees in the bargaining unit.
Again, a study of bargaining in 74 plants relat-
ing to contracting out . . . showed that 32
percent had collective-bargaining contracts
with clauses governing contracting out. Re-
flecting the growing number of cases in which
mutual discussions have even succeeded in
averting shutdowns is an article in the Wall
Street Journal, June 10, 1964, describing a
number of situations in which unions accepted
cuts in wages and fringe benefits to save em-
ployee jobs threatened by proposed plant relo-
cation or closure. [161 NLRB at 570. Foot-
notes omitted.]
The rationale of our dissenting colleague adds to
the collective-bargaining agreement terms not
agreed to by the parties and forecloses the exercise
of rational economic discussion and decison-making
which ultimately accrue to the benefit of all par-
ties.
C.
Accordingly, we conclude that Respondent's de-
cision to relocate did not modify the collective-bar-
gaining agreement in violation of Section 8(d). In
view of the parties' stipulation that Respondent sat-
isfied its obligation to bargain over the decision, we
603
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
also conclude that Respondent did not violate Sec-
tion 8(a)(5). 13
II. THE LOS ANGELES MARINE CASE
In reaching a result contrary to that reached
here, Milwaukee Spring I relied on Los Angeles
Marine Hardware Co., 235 NLRB 720 (1978), enfd.
602 F.2d 1302 (9th Cir. 1979). Los Angeles Marine,
however, misapplied then current Board law. In
holding that, after bargaining to impasse, the re-
spondent was not free to relocate work from one
location to another location during the contract
term without union consent, Los Angeles relied on
Boeing which in turn cited University of Chicago.
In finding an unlawful midterm modification in
University of Chicago, the Board relied on the fact
that the reassigned work continued to be per-
formed at the same location by another group of
the respondent's employees. The Board stated:
It is well established that an employer may,
after the necessary bargaining, terminate work
done by the union's members at a particular
location and . . . transfer it elsewhere . . .
even though such action is taken during the
contract term .... [210 NLRB at 190. Foot-
notes omitted.]
Thus, the Board's University of Chicago decision did
not support Los Angeles Marine, because it viewed
relocations differently from reassignments, and treat-
ed only the latter as requiring the union's consent
during the term of a contract. Even if we were
merely to correct Los Angeles Marine's misapplica-
tion of then current Board law, we would find it
"well established," in the words of the Board's
University of Chicago decision, that a midterm relo-
cation such as the one at issue is not a midterm
modification within the meaning of Section 8(d).
'3 The dissent's references to "contract avoidance" and "dolingl indi-
rectly what cannot be done directly" are misleading and deflect the read-
er's attention from the language of Sec. 8(d). Respondent's action is
branded unlawful, even though the dissent fails to identify any term or
condition contained in the contract that Respondent modified.
As we stated in the body of this opinion, we believe that, under Sec.
8(d), an employer must obtain a union's consent before implementing a
change during the life of a contract only if the change is in a mandatory
term or condition "contained in" the contract. Contrary to the dissent,
because we can identify no term or condition contained in the contract
that Respondent modified, we characterize Respondent's conduct as
doing directly what lawfully can be done directly, i.e., deciding to relo-
cate unit work after bargaining with the Union in good faith to impasse.
The dissent claims that Respondent's work relocation decision would
indirectly modify contractual wage rates. Thus, the dissent would imply
a work-preservation clause from the mere fact that an employer and a
union have agreed on a wage scale. This revolutionary concept, if adopt-
ed, would affect virtually every American collective-bargaining agree-
ment and would undoubtedly come as a surprise to parties that have la-
bored at the bargaining table over work-preservation proposals. An
agreed-upon wage scale, standing by itself, means only that the employer
will pay the stated wages to the extent that the employer assigns work to
the covered employees.
As we stated in part II,A, of this decision, how-
ever, we agree with the appellate courts, and not
the Board, in the University of Chicago and Boeing
cases. We are also not persuaded that work reas-
signment decisions and relocation decisions should
be treated differently for purposes of determining
whether there has been a midcontract modification
within the meaning of Section 8(d). Rather, we be-
lieve that the same standard applies in both in-
stances, and that the Seventh Circuit correctly
stated the governing principles in University of Chi-
cago, as follows:
[U]nless transfers are specifically prohibited by
the bargaining agreement, an employer is free
to transfer work out of the bargaining unit if:
(1) the employer complies with Fibreboard
Paper Products v. NLRB, 379 U.S. 203 ...
(1964), by bargaining in good faith to impasse;
and (2) the employer is not motivated by anti-
union animus, Textile Workers v. Darlington
Mfg. Co., 380 U.S. 263 . . . (1965). [514 F.2d
at 949.]14
Consistent with our decision today, we hereby
overrule University of Chicago, Boeing, and the por-
tion of Los Angeles Marine that held that the re-
spondent's transfer of work from one location to
another location violated Sections 8(a)(5) and 8(d).
IV. THE 8(A)(3) ISSUE
In Milwaukee Spring I, the Board also found that
Respondent's laying off employees as a conse-
quence of its relocation decision violated Section
8(a)(3) notwithstanding that the parties stipulated
that there was no union animus. Invoking the "in-
herently destructive" doctrine of Great Dane Trail-
ers,15 the Board apparently held that the 8(a)(3)
violation flowed from the finding that the reloca-
tion decision violated Section 8(a)(5). Accepting
this logic for the purposes of our decision only, we
conclude that, having found that Respondent com-
plied with its statutory obligation before deciding
to relocate and did not violate Section 8(a)(5),
there is no factual or legal basis for finding that the
consequent layoff of employees violated Section
8(a)(3).
i" The Seventh Circuit decided University of Chicago before the Su-
preme Court decided First National Corp. We do not here consider the
effect of First National on Fibreboard. See fn. 5, above.
Member Hunter agrees to overrule the Board's 8(d) and 8(aXS) hold-
ings of Los Angeles Marine, Boeing, and University of Chicago, but does so
for the reasons stated in part 1, and finds it unneccessary to reach the
matters discussed in part Ill.
'1 NLRBSv. Great Done Trailers, 388 US. 26 (1967).
604
MILWAUKEE SPRING DIVISION
V. REALISTIC AND MEANINGFUL COLLECTIVE
BARGAINING
Los Angeles Marine and Milwaukee Spring I dis-
courage truthful midterm bargaining over decisions
to transfer unit work. Under those decisions, an
employer contemplating a plant relocation for sev-
eral reasons, one of which is labor costs, would be
likely to admit only the reasons unrelated to labor
costs in order to avoid granting the union veto
power over the decision. The union, unaware that
labor costs were a factor in the employer's deci-
sion, would be unlikely to volunteer wage or other
appropriate concessions. Even if the union offered
to consider wage concessions, the employer might
hesitate to discuss such suggestions for fear that
bargaining with the union over the union's propos-
als would be used as evidence that labor costs had
motivated the relocation decision.
We believe our holding today avoids this dilem-
ma and will encourage the realistic and meaningful
collective bargaining that the Act contemplates.
Under our decision, an employer does not risk
giving a union veto power over its decision regard-
ing relocation and should therefore be willing to
disclose all factors affecting its decision. Conse-
quently, the union will be in a better position to
evaluate whether to make concessions. Because
both parties will no longer have an incentive to re-
frain from frank bargaining, the likelihood that
they will be able to resolve their differences is
greatly enhanced. ' 6
VI. CONCLUSION
Accordingly, for all the foregoing reasons, we
reverse our original Decision and Order and dis-
miss the complaint.
ORDER
The complaint is dismissed.
MEMBER ZIMMERMAN, dissenting.
Contrary to my colleagues, I would find, in
agreement with the result in the Board's initial de-
cision, that under Section 8(d) of the Act Respond-
ent is prohibited from transferring its assembly op-
erations from its Milwaukee facility to its McHenry
facility during the term of its collective-bargaining
agreement in order to obtain relief from the labor
t' The dissent misreads our decision. In part II1 we hold that the rele-
vant portion of Sec. 8(d) mandates that we identify a term or condition
contained in a contract before finding that an employer modified a con-
tract without union consent. In this part, we point out that our interpreta-
tion of Sec. 8(d) is consistent with the Act's policy, set forth in Sec. I, of
"encouraging the practice and procedure of collective bargaining." We
fail to discern how our decision undermines the statutory scheme or
avoids the application of Sec. 8(d).
costs imposed by that agreement, unless it obtains
the Union's assent.
There are two issues which must be decided in
each plant relocation case. The first issue is wheth-
er an employer has a duty to bargain with a union
over its relocation decision, or, in other words,
whether the relocation decision is a mandatory sub-
ject of bargaining. As explained below, I would
find such decision to be mandatory where the deci-
sion is amenable to resolution through collective
bargaining. Here, I would find Respondent's deci-
sion to relocate its assembly work from Milwaukee
to McHenry amenable to resolution through bar-
gaining and thus a mandatory subject of bargain-
ing. The second issue is whether under Section
8(d) an employer may implement its relocation de-
cision after an impasse in bargaining during the
term of the collective-bargaining agreement. As ex-
plained below, I would find that Section 8(d) pro-
hibits such a relocation of bargaining unit work in
the absence of an agreement with the union, but
only where the employer's relocation decision is
motivated solely or predominantly by a desire to
avoid terms of the collective-bargaining agreement.
My colleagues and I apparently agree that if a col-
lective-bargaining agreement contains an applicable
work-preservation clause, Section 8(d) requires the
employer to obtain the union's consent prior to any
transfer of work regardless of the reasons underly-
ing the transfer. The difference, then, between my
colleagues and myself is that I find Section 8(d) ap-
plicable to other contractual terms. Here, as Re-
spondent's decision was motivated solely by its
desire to avoid the wage provisions of the contract,
I would find that Respondent is prohibited from
implementing its decision without the Union's con-
sent during the term of the collective-bargaining
agreement.
The threshold issue which must be decided is
whether Respondent's relocation decision was a
mandatory subject of bargaining. There can be no
logical or practical discussion of the obligations im-
posed by Section 8(d) without deciding this issue.
Section 8(d) of the Act2 prohibits midterm uni-
lateral modifications and terminations of collective-
bargaining agreements, but only with regard to
mandatory subjects of bargaining. Chemical Work-
ers v. Pittsburgh Glass, 404 U.S. 157, 185 (1971).
Thus, if Respondent's decision to relocate its as-
' Sec. 8(d) of the Act provides, in pertinent part, that "to bargain col-
lectively is the performance of the mutual obligation of the employer and
the representative of the employees to meet at reasonable times and
confer in good faith with respect to wages, hours, and other terms and
conditions of employment . . . Provided. That where there is in effect a
collective-bargaining contract covering employees in an industry affect-
ing commerce, the duty to bargain collectively shall also mean that no
party to such contract shall terminate or modify such contract ....
605
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sembly operations were not a mandatory subject of
bargaining, there would be no further obligations
on Respondent under Section 8(d) and Respondent
would be free to implement its decision even in the
face of a collective-bargaining clause or agreement
specifically prohibiting such a move, subject only
to bargaining with the Union over the effects of its
decision. In these circumstances any finding re-
garding whether Respondent's decision constituted
a prohibited unilateral contract modification is
meaningless without a finding regarding whether
Respondent's decision was a mandatory subject of
bargaining.2 For the reasons below, I find that Re-
spondent's decision to relocate assembly work from
Milwaukee to McHenry was a mandatory subject
of bargaining.
A.
The legal framework for determining bargaining
obligations with regard to any employer decision
to alter the method of its operation is necessarily
grounded on the two Supreme Court decisions: Fi-
breboard Corp. v. NLRB 3 and First National Corp.
v. NLRB. 4 In light of the controversy over what
the Supreme Court said or did not say in those de-
cisions, it is important first to examine those opin-
ions.
Fibreboard presented the issue of whether an em-
ployer's decision to subcontract unit work was a
mandatory subject of bargaining. The employer in
Fibreboard decided, for economic reasons, that,
after its contract with the union expired, it would
contract out its maintenance work to an independ-
ent contractor and discharge its maintenance em-
ployees. The Supreme Court, adopting the ration-
ale of the Board, held that a management decision
to subcontract work out of an existing bargaining
unit was a mandatory subject of bargaining, cov-
ered by the phrase "terms and conditions of em-
ployment" in Section 8(d) of the Act. The Court
emphasized:
The subject matter of the present dispute is
well within the literal meaning of the phrase
"terms and conditions of employment." See
Order of Railroad Telegraphers v. Chicago &
N. W.R. Co., 362 U.S. 330. A stipulation with
respect to the contracting out of work per-
formed by members of the bargaining unit
might appropriately be called a "condition of
My colleagues base their avoidance of this latter issue on the fact
that the parties, by their stipulation and the manner in which they briefed
this case, treat Respondent's relocation decision as a mandatory subject of
bargaining. The Board, however, is not, and indeed should not, be bound
by stipulations regarding legal conclusions nor by a party's failure to ad-
dress a necessary issue.
3 379 U.S. 203 (1964).
4 452 U.S. 666 (1981).
employment." The words even more plainly
cover termination of employment which, as
the facts of this case indicate, necessarily re-
sults from the contracting out of work per-
formed by members of the established bargain-
ing unit. [379 U.S. at 210.]
The Court added that to hold that "contracting out
is a mandatory subject of collective bargaining
would promote the fundamental purpose of the Act
by bringing a problem of vital concern to labor and
management within the framework established by
Congress as most conducive to industrial peace."
379 U.S. at 211.
The Court noted two factors which illustrated
the propriety of requiring bargaining over the sub-
contracting decision. First, the employer's decision
to subcontract its maintenance work did not alter
the employer's basic operation as maintenance
work still had to be performed in the plant.
Second, the employer's decision did not involve
any capital investment but merely contemplated re-
placing existing employees with those of an inde-
pendent contractor "to do the same work under
similar conditions of employment." Thus, the
Court concluded, "to require the employer to bar-
gain about the matter would not significantly
abridge his freedom to manage the business." Final-
ly, the Court emphasized that the reasons for the
employer's decision to subcontract, namely, "that
economies could be derived by reducing the work
force, decreasing fringe benefits, and eliminating
overtime payments ... have long been regarded as
matters peculiarly suitable for resolution within the
collective bargaining framework .... " The
Court, however, did explicitly refrain from passing
on any other type of "contracting out" or "subcon-
tracting" which might arise.
First National presented the issue of whether an
employer's decision to close a portion of its oper-
ation was a mandatory subject of bargaining. The
employer in First National, without notice to or
bargaining with the union, which had recently
become its employees' collective-bargaining repre-
sentative, terminated its agreement to provide cus-
todial service to one of its customers, Greenpark,
which refused to agree to increase its fee paid to
First National Maintenance, and laid off the em-
ployees who had been servicing Greenpark. The
Court, reversing the Board, held that the employer
had no duty to bargain over its decision, character-
izing the decision as one "involving a change in the
scope and direction of the enterprise, [which] is
akin to the decision whether to be in business at all
.... " The Court held:
606
MILWAUKEE SPRING DIVISION
The concept of mandatory bargaining is pre-
mised on the belief that collective discussions
backed by the parties' economic weapons will
result in decisions that are better for both man-
agement and labor and for society as a whole.
This will be true, however, only if the subject
proposed for discussion is amenable to resolu-
tion through the bargaining process. Manage-
ment 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 before-
hand as to when it may proceed to reach deci-
sions without fear of later evaluations labeling
its conduct an unfair labor practice. Congress
did not explicitly state what issues of mutual
concern to union and management it intended
to exclude from mandatory bargaining. None-
theless, in view of an employer's need for un-
encumbered decisionmaking, bargaining over
management decisions that have a substantial
impact on the continued availability of em-
ployment should be required only if the bene-
fit, for labor-management relations and the col-
lective-bargaining process, outweighs the
burden placed on the conduct of the business.
[452 U.S. at 678-679. Citations and footnotes
omitted.]
The Court reaffirmed its decision in Fibreboard
and noted that, in that decision, it had engaged in
this type of "benefit" and "burden" analysis. The
Court concluded, however, that, unlike the subcon-
tracting decision in Fibreboard, "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 incre-
mental benefit that might be gained through the
union's participation in making the decision, and
we hold that the decision itself is not part of §
8(d)'s 'terms and conditions' ... " (452 U.S. at
686. Footnotes omitted.)
The Court, however, in both a footnote and in
the text of its decision then explicitly limited its
holding. In footnote 22 the Court stated:
In this opinion we of course intimate no
view as to other types of management deci-
sions, such as plant relocations, sales, other
kinds of subcontracting, automation, etc.,
which are to be considered on their particular
facts. See, e.g., International Ladies' Garment
Workers Union v. NLRB, 150 U.S. App. D.C.
71, 463 F.2d 907 (1972) (plant relocation pre-
dominantly due to labor costs); Weltronic Co.
v. NLRB, 419 F.2d 1120 (CA 6 1969) (decision
to move plant three miles), cert. denied, 398
U.S. 938 (1970); Dan Dee West Virginia Corp.,
180 NLRB 534 (1970) (decision to change
method of distribution, under which employee-
drivers became independent contractors);
Young Motor Truck Service, Inc., 156 NLRB
661 (1966) (decision to sell major portion of
business). See also Schwarz, Plant Relocation
or Partial Termination-The Duty to Deci-
sion-Bargain, 39 Ford. L. Rev. 81, 100-102
(1970). [452 U.S. at 686.]
In the text of the decision the Court stated:
In order to illustrate the limits of our hold-
ing, we turn again to the specific facts of this
case. First, we note that when petitioner de-
cided to terminate its Greenpark contract, it
had no intention to replace the discharged em-
ployees or to move that operation elsewhere.
Petitioner's sole purpose was to reduce its eco-
nomic loss, and the union made no claim of
antiunion animus. In addition, petitioner's dis-
pute with Greenpark was solely over the size
of the management fee Greenpark was willing
to pay. The union had no control or authority
over that fee. The most that the union could
have offered would have been advice and con-
cessions that Greenpark, the third party upon
whom rested the success or failure of the con-
tract, had no duty even to consider. These
facts in particular distinguish this case from
the subcontracting issue presented in Fibre-
board. Further, the union was not selected as
the bargaining representative or certified until
well after petitioner's economic difficulties at
Greenpark had begun. We thus are not faced
with an employer's abrogation of ongoing ne-
gotiations or an existing bargaining agreement.
Finally, while petitioner's business enterprise
did not involve the investment of large
amounts of capital in single locations, we do
not believe that the absence of "significant in-
vestment or withdrawal of capital," General
Motors Corp., GMC Truck & Coach Div., 191
NLRB at 952, is crucial. The decision to halt
work at this specific location represented a sig-
nificarit change in petitioner's operations, a
change not unlike opening a new line of busi-
ness or going out of business entirely. [452
U.S. at 687-688.]
Although the Supreme Court in Fibreboard and
First National did not deal directly with the issue
presented here, that of whether an employer's deci-
sion to relocate work from one of its plants to an-
other is a mandatory subject of bargaining, those
decisions strongly suggest that, under the facts of
this case, Respondent's decision to relocate its as-
607
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sembly work from Milwaukee to McHenry was a
mandatory subject of bargaining.
The common thread of both the Fibreboard and
First National decisions is that bargaining is re-
quired where the subject matter is amenable to res-
olution through the bargaining process. Where, as
in First National, the employer's decision to alter
its operation is motivated by "a concern . . .
wholly apart from the employment relationship,"
then bargaining is not required as the union has no
control over or authority to affect the employer's
concern. In short, as the Court pointed out in First
National, all that a union can do in such cases is to
offer advice. Under these circumstances, bargaining
would be futile. But where, as in Fibreboard, the
reasons for an employer's decision are "peculiarly
suitable for resolution within the collective bargain-
ing framework," bargaining is required. Thus, the
Board in each case must analyze the employer's de-
cision and the reasons underlying it to determine
whether the decision is amenable to the resolution
through collective bargaining or, in the words of
the First National decision, whether "the benefit,
for labor-management relations and the collective-
bargaining process, outweighs the burden placed
on the conduct of the business."
B.
I find the particular fact situation presented by
the instant relocation of work more analogous to
the subcontracting decision in Fibreboard than the
partial closing decision in First National. That find-
ing begins with an analysis of Respondent's deci-
sion in terms of the similarities between this case
and Fibreboard and the dissimilarities between this
case and First National.
The factors which led the Court in Fibreboard to
conclude that a subcontracting decision was ame-
nable to resolution through collective bargaining
also are present here. First, as in Fibreboard, Re-
spondent's decision to relocate the assembly work
would not alter Respondent's basic operation. Re-
spondent would still perform the same amount of
assembly work in the same manner. The only
change in Respondent's operation would be the lo-
cation of the work being performed and the em-
ployees performing it. Rather than continuing to
perform the work in Milwaukee by employees rep-
resented by the Union, Respondent would have the
work performed in McHenry by nonunion employ-
ees. Indeed, Respondent's decision contemplated
even less of an alteration of its operation than was
present in Fibreboard since Respondent, after the
relocation, would still retain complete control over
the employees performing the assembly work as
contrasted with a subcontracting situation where
the employees doing the work would be controlled
by an altogether different employer. Second, rela-
tively little capital investment was contemplated by
Respondent in relocating the work. The only ap-
parent expenditure of funds resulting from Re-
spondent's relocation decision involved the reloca-
tion of some equipment from Milwaukee to
McHenry, but the record contains no estimate of
the cost involved.
Moreover, Respondent's decision to relocate the
assembly work would not result in the shutting
down of the Milwaukee plant or the sale of Re-
spondent's assets at the Milwaukee plant. The as-
sembly work represented only approximately one-
third of the bargaining unit work performed at the
Milwaukee plant, and Respondent intended to per-
form the remainder of the work at Milwaukee.
Under these circumstances, I do not find that Re-
spondent's decision to relocate the valve work in-
volved "a significant investment or withdrawal of
capital [which] will affect the scope and ultimate
direction of an enterprise." General Motors Corp.,
191 NLRB 951, 952 (1971).
As in Fibreboard, Respondent's reasons for relo-
cating the valve work are "peculiarly suitable for
resolution within the collective-bargaining frame-
work." The parties stipulated that Respondent's de-
cision to relocate assembly work was motivated
solely because of the comparatively higher labor
costs at Milwaukee than McHenry. The Supreme
Court in both Fibreboard and First National empha-
sized that a desire to reduce labor costs was amena-
ble to resolution through bargaining. For in such a
case, it is clear that the employer and the union
may be able to reach a mutually acceptable solu-
tion through collective bargaining, and bargaining
should therefore not be predetermined to be futile.
Indeed, had the Union agreed to Respondent's pro-
posal for reductions in wages and benefits, Re-
spondent admittedly would not have relocated the
assembly work to McHenry. Accordingly, I find
that Respondent's reason for seeking to relocate its
assembly operations was appropriate for resolution
through collective bargaining.
Conversely, the factors which led the Supreme
Court to conclude in First National that the em-
ployer's decision to close a part of its operation
was not a manadatory subject of bargaining are not
present in this case. As noted above, Respondent
intended to continue assembling automobile parts at
McHenry in the same quantity and in the same
fashion as in Milwaukee but with different employ-
ees. 5 Respondent's decision to relocate the assem-
5 The parties stipulated that Respondent lost a contract with Fisher
Body resulting in a $200,000-per-month decline in revenues. It is unclear
Continued
608
MILWAUKEE SPRING DIVISION
bly operation can in no way be deemed "akin to
the decision whether to be in business at all," or to
represent "a change not unlike opening a new line
of business or going out of business entirely." Thus,
the Supreme Court's emphasis in First National that
the employer had no intention to replace the dis-
charged employees or to move elsewhere the por-
tion of its business that it closed is clearly not ap-
plicable in the instant case. Nor, is it true here, as
in First National, that the Union had no control
over the reasons behind Respondent's decision and
could only have offered advice. As shown above,
the reason behind Respondent's decision was to
reduce labor costs which the Union could have
met by contract concessions. Moreover, here,
unlike First National, the Union was selected as the
employees' bargaining representative long before
Respondent's economic reasons surfaced for relo-
cating the work. In fact, the Court emphasized in
First National that it was not faced with an em-
ployer's abrogation of an existing bargaining agree-
ment. There is such an abrogation here.
Finally, the First National decision also lends af-
firmative support to the proposition that Respond-
ent's decision to relocate the assembly operation
was a mandatory subject of bargaining. Although
the Court stated in footnote 22 that it was not inti-
mating a view as to other types of management de-
cisions, it cited Ladies Garment Workers v. NLRB
(McLoughlin Mfg. Corp.), 463 F.2d 907 (D.C. Cir.
1972), in which the District of Columbia Court of
Appeals enforced the Board's finding that the em-
ployer's decision to relocate its plant from Indiana
to Alabama to reduce labor costs was a mandatory
subject of bargaining. The Court also cited Wel-
tronic Co. v. NLRB, 419 F.2d 1120 (6th Cir. 1969),
in which the Sixth Circuit enforced the Board's
finding that the employer had an obligation to bar-
gain with the union over the decision to relocate
its plant to a new plant 3 miles away to reduce
labor costs, to obtain more space, and to have all
its work performed in one building. Certainly, the
Court's citation of these two cases, which were the
only cases cited involving plant relocations, indi-
cates, at the very least, that the Court expressed no
disapproval of those court decisions. 6
from the record whether this loss resulted in a decreased amount of as-
sembly work, molding work, or other work. However, even if it resulted
in less assembly work, the crucial point is that, if Respondent had imple-
mented its relocation decision, it would have performed at McHenry
whatever assembly work it had, which work had previously been per-
formed at Milwaukee.
6 This point is further bolstered by the additional citation in the foot-
note to the last two pages of a law review article written by Thomas J.
Schwarz, who advocated on those pages that "[d]ecision-bargaining
should be required in all cases where the employer plans to substitute
non-unit workers for unit workers,." including cases involving plant relo-
cations. 39 Fordham L. Rev 8 10. 100-102.
The application of Fibreboard principles to plant
relocation situations in these cases underscores the
logical connection between most instances of either
subcontracting or relocation, as compared to a par-
tial closing which is "akin to the decision whether
to be in business at all." Subcontracting or reloca-
tion decisions typically are indistinct from the em-
ployees' standpoint: they have lost their jobs and
others are now performing the work for the same
employer either directly or indirectly. From the
employer's viewpoint, there is also a strong
common element: in either situation the employer
has determined to continue the bargaining unit
work by other employees, motivated in either case
by a desire to increase its efficiency of operations.7
My colleagues admit that the parties could have
bargained for a work-preservation clause. Indeed,
such clauses are mandatory subjects of bargaining.
See National Woodwork Manufacturers Assn., 386
U.S. 612 (1967). The fact that the parties did not
bargain over such a clause does not transform what
would have been a mandatory subject of bargain-
ing into a nonmandatory subject of bargaining.
Where, as here, the factors predominantly in-
volved are amenable to collective bargaining, re-
quiring Respondent to bargain over its decision to
relocate its valve operation provides benefits for
labor-management relations and the collective-bar-
gaining process which outweigh the burden placed
on the conduct of its business. Accordingly, I find
the decision to be a mandatory subject of bargain-
ing."
C.
I turn now to the issue of whether Respondent is
free unilaterally to implement its relocation deci-
sion during the term of the collective-bargaining
agreement without the Union's consent after bar-
gaining to impasse with the Union. Strong policy
arguments lie on both sides of this issue. However,
for the reasons discussed below, I am persuaded
that Congress intended the Act to prohibit such
midterm relocations where the employer's reloca-
tion decision was motivated solely or predominant-
ly by a desire to avoid terms of a collective-bar-
gaining agreement.
As noted above, Section 8(d) of the Act prohib-
its midterm changes in any provision of a collec-
tive-bargaining agreement relating to mandatory
subjects of bargaining without first obtaining the
union's consent. It is well settled, and my col-
leagues agree, that an employer acts in derogation
See Schwarz, 39 Fordham L. Rev. 8-10, 101-102.
For the reasons stated in the Board's initial decision, I further find
that the Union did not waive its statutory rights to bargain over Re-
spondenl's relocation decision
609
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
of its bargaining obligations under Section 8(d),
and thereby violates Section 8(a)(5), when it makes
any midterm change in the contractual wage rate
even though the employer's action is compelled by
economic necessity9 or the employer has offered to
bargain with the union over the change and the
union has refused.10 Obviously then, my colleagues
and I would agree that had Respondent in this case
decided to reduce the wages paid to the assembly
employees while continuing to perform the assem-
bly work at Milwaukee, Respondent's decision
would violate Section 8(a)(5). Respondent's deci-
sion to relocate the assembly work to McHenry
would achieve the same result, albeit indirectly: its
employees would continue to perform assembly
work but at reduced wage rates. The issue then is
whether the fact that Respondent decided to relo-
cate the work takes Respondent's decision outside
the proscriptions of Section 8(d), or in the words
of the administrative law judge in Los Angeles
Marine Hardware Co.," whether the Act allows
Respondent "to achieve by indirection that which
[it could not] achieve by direct means under Sec-
tion 8(d) of the Act."
Only in recent years has the issue of the effect of
Section 8(d) on employer work transfer and reloca-
tion decisions'2 come before the Board. Prior to
the initial decision in this case, the Board has ad-
dressed this issue in only four decisions.
In University of Chicago,'3 decided the year after
Oak Cliff-Golman, the Board faced for the first
time the issue of whether an employer's transfer of
work was prohibited under Section 8(d). There, the
university had two separate bargaining units of cus-
todians, one represented by Service Employees'
Union Local 321 and the other represented by
AFSCME Local 1657. In the midterm of the con-
tract with Local 321, the university unilaterally
transferred the work of that unit to the other unit
represented by Local 1657, where the employees
received a lower wage rate, and abrogated the con-
tract with Local 321. The administrative law judge
found the university's action proscribed under Sec-
tion 8(d) as its effect was to modify the wage pro-
visions of the contract with Local 321. The Board
affirmed the judge's decision but stressed that the
university's action was a direct repudiation of the
recognition clause in the Local 321 contract. The
Seventh Circuit denied enforcement of the Board's
decision, finding that the sole purpose behind the
I Oak Cliff-Golman Baking Co., 207 NLRB 1063 (1973), enfd. 505 F.2d
1302 (5th Cir. 1974), cert. denied 423 U.S. 826 (1975).
10 C & S Industries, 158 NLRB 454 (1966).
'" 235 NLRB 720, 735 (1978), enfd. 602 F.2d 1302 (9th Cir. 1979).
'1 I agree with my colleagues that, for the purpose of deciding the
effect of Sec. 8(d), there can be no logical distinction drawn between
work transfer, reassignment, and relocation decisions.
Ia 210 NLRB 190 (1974), enf denied 514 F.2d 942 (7th Cir. 1975).
university's transfer of the work was to obtain
higher quality performance of the work, not to
reduce the wage rate paid to the employees per-
forming the work, and that the university was free
to transfer the work after bargaining to impasse.
In Boeing Co. 4 the Board again found that the
employer violated the recognition clause in the col-
lective-bargaining agreement by transferring work
from the bargaining unit to another unit without
the union's consent. The Ninth Circuit, agreeing
with the Seventh Circuit's University of Chicago de-
cision, denied enforcement, stressing that the em-
ployer's action was admittedly motivated by the
desire to increase efficiency in production. Thus, in
neither case was contract avoidance the sole or
controlling motive for transferring the unit work.
The next decision involving Section 8(d) and
work relocation is Los Angeles Marine Hardware
Co., 5 a case factually similar to the instant case. In
that case the employer, during the term of the con-
tract, relocated a portion of its business from a
unionized facility to nonunionized facilities without
the union's consent. The employer, confronted
with serious adverse economic prospects, based its
relocation decision on the fact that its labor costs
under the contract were significantly higher than
those of its competitors. The administrative law
judge, with the Board's adoption, found the em-
ployer's action proscribed under Section 8(d). As
explained by the judge:
Under Section 8(d) of the Act, no party to a
collective-bargaining agreement can be com-
pelled to discuss or agree to a midterm modifi-
cation of a collective-bargaining agreement,
and, accordingly, a proposed modification can
be implemented only if the other party's con-
sent is first obtained. .... This mandate is not
excused either by subjective good faith or by
the economic necessity of maintaining viability
of an employer's operation and preserving the
jobs of the employees in the bargaining
unit.... Consequently, notwithstanding the
persuasivess and validity of an employer's eco-
nomic straits, an employer is not free, without
union consent, to make midterm modifications
in wage rates .... In doing so [the respond-
ent] did, of course, relocate the recreational
sales facility. However, that fact alone does
not serve to change the result. For, to permit
relocation alone to vary this result would
mean that employers would be permitted to
achieve by indirection that which [they] were
denied the opportunity to achieve by direct
"4 230 NLRB 696 (1977), enf. denied 581 F.2d 793 (9th Cir. 1978).
'a 235 NLRB 720, enfd. 602 F.2d 1302.
610
MILWAUKEE SPRING DIVISION
means under Section 8(d) of the Act. [235
NLRB at 735. Case citations omitted.]
The Ninth Circuit enforced the Board's decision,
agreeing with the Board that the employer's action
constituted a midterm repudiation of the contract
in violation of the Act. The court reiterated the
judge's rationale that to permit such a relocation
"would allow an employer to do indirectly what
cannot be done directly under the Act."' 6
Adhering to the Los Angeles Marine decision, the
Board in Brown Co. 17 found that the employer
violated Section 8(a)(5) by unilaterally, without the
union's consent, transferring bargaining unit work
to one of its subsidiaries midterm in the contract
for the sole purpose of escaping its contractual
wage obligations.
I find that Respondent's midterm relocation deci-
sion was proscribed under Section 8(d) of the Act.
Such decision, admittedly motivated solely to
avoid the contractual wage rates, was simply an at-
tempt to modify the wage rate provisions in the
contract, albeit indirectly. Respondent voluntarily
obligated itself to pay a certain amount of wages to
employees performing assembly work during the
term of the contract, and it cannot avoid this obli-
gation merely by unilaterally relocating the work
to another of its facilities, just as it could not by
unilaterally reducing the wage rate. It is disingen-
uous to argue, as do my colleagues, that Respond-
ent's relocation decision did not disturb the con-
tractual wages and benefits at the Milwaukee facili-
ty. If Respondent had implemented its decision,
there would be no assembly employees at the Mil-
waukee facility to receive the contractual wages
and benefits. Rather, all assembly work would be
performed at McHenry where Respondent would
pay its employees less for the same work. Under
these circumstances, my colleagues' conclusion that
Respondent left the wage and benefit provisions
"intact" at Milwaukee is illogical and without legal
significance.
Similarly, their claim that my affirmation of the
8(d) mandate implies a work-preservation clause in
virtually every labor contract is equally unfounded.
Although a valid work-preservation clause could
serve to bar a relocation of bargaining unit work
motivated for reasons other than avoidance of con-
tractual terms, that circumstance is unrelated to the
instant case. Here, Respondent does seek to modify
the contractual wage provision, a result that is pro-
hibited by Section 8(d) itself and is not dependent
on any work-preservation clause. It is hardly "rev-
olutionary," as my colleagues assert, simply to
' 6{02 F 2d at 13107
'' 243 Nl.RH 769 (1979), remanded mem. 663 F.2d 1078 (9th Cir.
1981)
apply the contractual terms to which the parties
voluntarily agreed.
At the same time, my views of the narrow reach
of Section 8(d) brings me into partial agreement
with my colleagues in this case. In agreement with
them, I would not endorse the approach utilized by
the Board in its University of Chicago and Boeing
decisions that employer midterm transfers of work
abrogate the contractual recognition clause. Such
clauses are "merely the parties' descriptive recita-
tion of the physical location of the facilities at the
time of the negotiations,""' and do not create an
implied prohibition against the transfer or reloca-
tion of work away from the bargaining unit regard-
less of the employer's motivation.
Neither do I endorse the Board's decisions in
University of Chicago and Boeing to the extent that
the Board found that an employer's midterm relo-
cation decision motivated by reasons unrelated to a
desire to avoid the contractual wage rates is pro-
scribed by Section 8(d). As the motivation for the
employers' action in those cases was a desire to in-
crease productivity, I concur in the court opinions
in those cases that the employers' actions did not
violate Section 8(d). 19
In my view the determinative factor in deciding
whether an employer's midterm relocation decision
is proscribed under Section 8(d) is the employer's
motive.2 0 Where, as here, the decision is controlled
by a desire to avoid a contractual term with regard
to a mandatory subject of bargaining, such as
wages, then the decision is violative under Sections
8(d) and 8(a)(5), and the employer may not imple-
ment the decision during the term of the contract
without the union's consent. But where the deci-
l' Los Angeles Marine Hardware Co., 602 F 2d at 1306.
19 My colleagues' criticism that I have ignored the Board's decision in
Ozark Trailers, 161 NLRB 561 (1966), reveals a misunderstanding of my
position. In my view, even if the employer's proposed decision is amena-
ble to resolution through collective bargaining and thus constitutes a sub-
ject of mandatory bargaining, an 8(d) violation is not established merely
because the reasons underlying the employer's decision are economic;
rather, the reasons must amount to the avoidance of a contractual term.
Since Ozark was not litigated under an 8(d) theory, it is irrelevant to a
discussion of the application of Sec. 8(d). In any event, it is difficult, if
not impossible, to attempt to ascertain some 20 years later whether the
employer's decision to close the Ozark plant and subcontract the work
was motivated by a desire to avoid any contractual term. The employer's
asserted reasons for its action were that "excessive man hours were re-
quired for the production of custom refrigerated truck bodies; the truck
bodies produced and sold would not perform properly because of defec-
tive workmanship, necessitating a return of the bodies to the plant at dis-
astrous expense to Respondents; and the plant facilities were not efficient-
ly laid out" 161 NLRB at 567-568 Assuming none of these reasons re-
lated to a specific contractual term which the employer sought to avoid,
the employer would be free to implement its decision after satisfying its
bargaining obligations.
20 See O'Keefe and Tuohey, Economically Motivared Relocations of
Work and an Employer's Duties under Section 8(d) of the National Labor
Relations Act: A Three-Step Analysis, Fordham Urban Law Journal 795,
842-843 (1982-83). As shown above, motive is also crucial in determining
whether an employer's decision is a mandatory subject of bargaining.
611
DECISIONS OF NATIONAL LABOR RELATIONS BOARD
sion is motivated by reasons unrelated to contract
avoidance, then the employer may unilaterally im-
plement its decision after bargaining to impasse
with the union.2 '
My colleagues claim that this approach encour-
ages employers to deny that a relocation decision is
motivated by a desire to reduce labor costs. I dis-
agree. An employer considering relocation to
reduce labor costs has substantial incentive to tell
the union why it needs relief and how much relief
it needs: relocation will usually involve the transfer
of equipment and management personnel, as well as
the training of new employees to perform the relo-
cated work. An employer who can avoid these
kinds of disruption to production by bargaining
with the union for contract concessions will likely
do so. See First National Corp. v. NLRB, 452 U.S.
at 682. Indeed, Respondent's actions illustrate this
point. Respondent, whose relocation decision was
admittedly motivated by its desire to reduce labor
costs, informed the Union of its plan and its rea-
sons, and engaged in concessions bargaining,
which, if successful, would have resulted in the as-
sembly operations remaining in Milwaukee.
Moreover, even assuming that my colleagues'
prediction would prove to be accurate on some oc-
casions under the limited application of Section
8(d) I find in this case, the Board cannot use this
reasoning to avoid the application of that section.
21 Where the employer's decision involves reasons both related to con-
tract avoidance and unrelated to contract avoidance, I would find the de-
cision proscribed by Sec. 8(d) only where the reasons related to contract
avoidance are predominant.
Before the enactment of Section 8(d) in 1947, an
employer was under a duty, upon request, to bar-
gain with a union over terms and conditions of em-
ployment regardless of whether or not an existing
collective-bargaining agreement bound the parties
as to the terms and conditions to be discussed. See
NLRB v. Sands Mfg. Co., 306 U.S. 332, 342 (1938).
However, Congress, desiring to end this continuous
bargaining, enacted the 8(d) proscription against
midterm contract modifications to achieve "peace-
ful industrial relations" through stable collective-
bargaining agreements which guard "the right of
either party to a contract to hold firm to the . . .
terms or conditions of employment specifically pro-
vided for in writing." Equitable Life Insurance Co.,
133 NLRB 1675, 1689 (1961). See 2 Legislative
History (LMRA 1947), at 1625; Chemical Workers
v. Pittsburgh Glass, 404 U.S. at 186. Under these
circumstances, the Board may not undermine the
statutory scheme merely because some violators of
the Act may not be brought to justice.
Accordingly, I would find that Respondent, by
its midterm decision to relocate the assembly work
from Milwaukee to McHenry without the Union's
consent solely to avoid the contractual wage rates,
acted in derogation of its bargaining obligation
under Section 8(d), and thereby violated Section
8(a)(5) of the Act. 22
22 For the reasons given by the Board and the Ninth Circuit in Los
Angeles Marine, I would further find that Respondent violated Sec.
8(a)(3) of the Act.
612