F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
FEB 5 2003
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
PUBLIC SERVICE COMPANY OF OKLAHOMA,
Petitioner and Cross-Respondent,
v. Nos. 01-9525 &
01-9533
NATIONAL LABOR RELATIONS BOARD,
Respondent and Cross-Petitioner,
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, LOCAL UNION 1002,
Intervenor.
Appeal from National Labor Relations Board
(Nos. 17-CA-18967, 17-CA-18989, and 17-CA-19418)
Lynn Paul Mattson (Jon E. Brightmire and Michael C. Redman with him on the
briefs) of Doerner, Saunders, Daniel & Anderson, L.L.P., Tulsa, Oklahoma, for
Public Service Company of Oklahoma.
Fred B. Jacob (Robert J. Englehart, Arthur F. Rosenfeld, John E. Higgins, Jr.,
John H. Ferguson, and Aileen A. Armstrong with him on the brief) of National
Labor Relations Board, Washington, D.C., for National Labor Relations Board.
Sue D. Gunter (Victoria L. Bor with her on the brief) of Sherman, Dunn, Cohen,
Leifer, Yellig P.C., Washington, D.C., for Intervenor.
Before O’BRIEN and McWILLIAMS, Circuit Judges, and BRORBY, Senior
Circuit Judge.
BRORBY, Senior Circuit Judge.
Public Service Company of Oklahoma petitioned for review of an order
issued by the National Labor Relations Board. Among other things, the order
required the Company to bargain collectively and in good faith with the
International Brotherhood of Electrical Workers, Local Union 1002. The Board
filed a cross-application for enforcement of the order. We granted the Union
permission to intervene in support of the Board. Exercising jurisdiction under
§ 10(e) and (f) of the National Labor Relations Act, see 29 U.S.C. § 160(e) & (f),
we deny the Company’s petition for review and grant the Board’s cross-
application for enforcement. 1
Public Service Company of Oklahoma is a public utility providing
electricity to customers in Oklahoma, Louisiana, Arkansas, and Texas. For
almost fifty years, the Company has had a collective bargaining relationship with
the International Brotherhood of Electrical Workers, Local Union 1002.
1
We also deny the Union’s motion for leave to file a surreply brief.
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The Company and the Union began negotiating a new collective bargaining
agreement on July 1, 1996. They met regularly for nearly six months without
reaching an agreement. Throughout negotiations, Public Service Company
insisted on several contract proposals granting it greater management rights in a
variety of areas, arguing increased management control was necessary to make the
Company more competitive in a soon-to-be deregulated economic environment.
The Company argued it was not trying to “break” the Union but “to clearly
establish the rights of [the Company’s] management to run the business without
interference.” The Union did not agree to any of the Company’s contract
proposals. Public Service Company, accusing the Union of negotiating in bad
faith, declared an impasse in bargaining. The Company then implemented
portions of its final contract offer on December 29, 1996.
Following Public Service Company’s implementation of its final contract
offer, the Union filed three separate unfair labor practice charges against the
Company. 2 After investigating the charges, General Counsel for the National
2
Public Service Company also filed three unfair labor practice charges
against the Union. The Company argued, among other things, the Union “refused
to bargain in good faith” with the Company. The Regional Director for the
National Labor Relations Board did not issue a complaint on any of the charges,
finding “insufficient evidence” the Union “engaged in conduct designed to
frustrate bargaining” or “unlawfully refused to bargain.”
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Labor Relations Board issued a consolidated complaint against the Company. In
due course a hearing was held, and the administrative law judge issued a decision
finding, among other things, the Company violated § 8(a)(1) and (5) of the
National Labor Relations Act by insisting on proposals undermining “the Union’s
representational function” as a condition for agreement. Although the Company
filed exceptions to the administrative law judge’s opinion, a three-member panel
of the National Labor Relations Board affirmed “the judge’s rulings, findings, and
conclusions.” The Board found the Company’s contract proposals “would have
given the [Company] extraordinarily broad control over employee benefits and
discipline and discharge.” The Company’s “proposals taken as a whole required
the Union to cede substantially all of its representational function.” The Board
concluded the Company violated the Act by “insisting” on these proposals
throughout negotiations “as a price for any collective-bargaining agreement.”
This petition for review and cross-application for enforcement followed.
Employer’s Bad-Faith Conduct
Public Service Company argues the National Labor Relations Board’s
decision finding the Company bargained in bad faith is inconsistent with
established case law. We review the Board’s conclusions of law de novo and
“uphold the [Board’s] factual findings if they are supported by substantial
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evidence in the record as a whole.” See N.L.R.B. v. F & A Food Sales, Inc., 202
F.3d 1258, 1260 (10th Cir. 2000) (quotation marks and citation omitted). Under
the National Labor Relations Act, employers commit an unfair labor practice if
they “interfere with, restrain, or coerce employees in the exercise of the[ir]
rights” to organize and bargain collectively, 29 U.S.C. § 158(a)(1), or if they
“refuse to bargain collectively with the representatives of [their] employees,” 29
U.S.C. § 158(a)(5). The Act defines the obligation of employers to bargain
collectively as the “obligation ... to meet at reasonable times and confer in good
faith with respect to wages, hours, and other terms and conditions of
employment.” 29 U.S.C. § 158(d). The obligation to bargain in good faith “does
not compel either party to agree to a proposal or require the making of a
concession.” Id. In determining whether the employer bargained in good faith,
the Board may not “sit in judgment upon the substantive terms of collective
bargaining agreements.” N.L.R.B. v. American Nat’l Ins. Co., 343 U.S. 395, 404
(1952). However, in determining good faith, the Board should examine the
totality of the circumstances, including the substantive terms of proposals. See
Borden, Inc. v. N.L.R.B., 19 F.3d 502, 512 (10th Cir. 1994); N.L.R.B. v. A-1 King
Size Sandwiches, Inc., 732 F.2d 872, 874 (11th Cir. 1984). “Sometimes,
especially if the parties are sophisticated, the only indicia of bad faith may be the
proposals advanced and adhered to.” N.L.R.B. v. Wright Motors, Inc., 603 F.2d
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604, 609 (7th Cir. 1979).
The Company claims the Board’s decision is incorrect because it found bad
faith without identifying which of the Company’s contract proposals were illegal
or explaining why they were illegal. The Company, however, misunderstands the
Board’s decision. The Board’s decision was not based on the illegality of any
particular proposal. Instead, the Board held the Company violated the Act “by
insisting as a price for any collective-bargaining agreement that its employees
give up their statutory rights to be properly represented by the Union.” In other
words, the Company’s rigid adherence throughout negotiations to a battery of
contract proposals undermining “the Union’s ability to function as the employees’
bargaining representative” demonstrated it “could not seriously have expected
meaningful collective bargaining.” 3 The Board did not err in inferring bad faith
3
The Board’s inference of bad faith is further supported by its finding that
the Company’s “conduct away from the bargaining table confirms that it was
focused more intently on eliminating its bargaining obligation to the Union than
on successfully negotiating a collective-bargaining agreement.” The Company
sent an e-mail to its employees during the bargaining period aimed at obtaining “a
decertification election to remove the Union as collective-bargaining
representative.” The administrative law judge held this was unlawful interference
with the employees’ rights under the National Labor Relations Act. See 29
U.S.C. § 158(a)(1). The Company did not challenge the judge’s findings in its
petition to the National Labor Relations Board or in its opening brief before this
court. The Company argues for the first time in its reply brief that the e-mail was
sent after bargaining ended and is not “evidence of improper conduct.” The
Company, however, waived this issue by not raising it sooner. See 29 U.S.C.
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from this conduct. 4 See Capitol Steel & Iron Co. v. N.L.R.B., 89 F.3d 692, 696
(10th Cir. 1996) (explaining an employer may violate its duty to bargain in good
faith if its conduct “reflects a design to undermine the union in its role as the
employees’ sole bargaining representative”); Borden, Inc., 19 F.3d at 512 (noting
“rigid adherence to disadvantageous proposals may provide a basis for inferring
bad faith” (emphasis in original)); Colorado-Ute Elec. Ass’n. v. N.L.R.B., 939
F.2d 1392, 1405 (10th Cir. 1991) (noting that maintaining a “rigid position
throughout negotiations ... could potentially be the basis for a finding of bad
faith” (quotation marks omitted)).
Public Service Company also argues the Board’s decision “nullifie[s]” the
§ 160(e) ("No objection that has not been urged before the Board, its member,
agent, or agency, shall be considered by the court, unless the failure or neglect to
urge such objection shall be excused because of extraordinary circumstances.");
Woelke & Romero Framing, Inc. v. N.L.R.B., 456 U.S. 645, 666 (1982) ("[T]he
Court of Appeals lacks jurisdiction to review objections that were not urged
before the Board."); State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7
(10th Cir. 1994) (holding appellant waived an issue by failing to raise it in his
opening brief).
4
Of course, the Board’s inference of bad faith from rigid adherence
throughout negotiations to contract proposals undermining a union’s
representational function must be supported by substantial evidence. See 29
U.S.C. § 160(e). Here, the Company makes a half-hearted argument suggesting
the Board’s inference is not supported by substantial evidence. After reviewing
the argument and the evidence, we conclude the Board’s decision is supported by
substantial evidence.
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Supreme Court’s decision in N.L.R.B. v. American National Insurance Co., and
our decision in Colorado-Ute Electric Ass’n v. N.L.R.B. We fail to see, and the
Company does not explain, how the Board’s decision conflicts with these
decisions. The Supreme Court held in American National that bargaining for a
management function clause is not, “per se, an unfair labor practice.” American
Nat’l Ins. Co., 343 U.S. at 409. In keeping with American National, the Board in
this case did not condemn Public Service Company merely for bargaining for
certain proposals. Instead, it held the Company bargained in bad faith by
insisting throughout negotiations on contract proposals undermining “the Union’s
ability to function as the employees’ bargaining representative.” In Colorado-
Ute, we held an employer may lawfully implement a management function clause
upon reaching a valid impasse in bargaining. See Colorado-Ute, 939 F.2d at
1404-05. Our decision was informed by the Board’s findings the employer
negotiated in good faith and reached a valid impasse in bargaining. Id. at 1405.
In contrast, the Board in this case found the Company bargained in bad faith by
insisting throughout negotiations on proposals undermining the Union’s
representational function. A valid impasse in bargaining was never reached.
Therefore, Public Service Company could not lawfully implement its final
contract offer. See Newspaper Printing Corp. v. N.L.R.B., 625 F.2d 956, 966
(10th Cir. 1980). The Board’s decision finding the Company bargained in bad
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faith is supported by the evidence and case law.
Alleged Bad-Faith Conduct by the Union
Public Service Company argues the administrative law judge erred in
failing to find the Union bargained in bad faith. The Company claims there is
“undisputed” evidence the Union employed bargaining strategies found in a
manual entitled The Inside Game. The manual is a forty-one-page publication
instructing employees on strategies to “agitate and pressure the employer prior to
and during the bargaining process.” The Company claims the Union, following
the strategies outlined in the manual, illegally “avoid[ed] an impasse,” “hurt
production,” and refused “to consider any of [the Company’s] ... different
proposals.”
The administrative law judge did not find the Union bargained in bad faith
because there was “insufficient evidence that the Union initiated the course of
conduct the [Company] advances.” The judge found it “unnecessary to reach the
‘manual’ issues raised by the [Company] because [there was not] a sufficient
evidentiary nexus between the manual and the conduct of the Union on this
record.” Although it made no separate findings on this issue, the National Labor
Relations Board affirmed the judge’s “rulings, findings, and conclusions.” The
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judge’s findings as affirmed by the Board are conclusive “if supported by
substantial evidence on the record considered as a whole.” See 29 U.S.C.
§ 160(e). We conclude there is substantial evidence in the record supporting the
judge’s findings.
The Company claims Union employees, after months of training on
strategies in The Inside Game, bargained in bad faith by refusing to consider its
proposals yet trying to avoid a technical impasse. 5 Then, according to the
Company, Union members deliberately slowed production in an effort to force the
Company to present proposals more favorable to the Union. The Company points
to discussions at Union meetings in support of its argument.
After reviewing minutes from Union meetings and other evidence, we
conclude the administrative law judge and the Board correctly found the Union
did not bargain in bad faith. Although The Inside Game was mentioned by name
at some Union meetings, actual strategies advocated in the manual were discussed
5
The Company apparently believes the alleged Union misconduct
“excused” the Company’s bad faith conduct. We need not reach the merit of this
belief because we conclude the Union did not bargain in bad faith.
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at only one Union meeting. 6 At this meeting, a Union representative urged
employees to “play the ‘Inside Game.’ Where we abide by every rule and perform
every check called for by company and OSHA safety rules.” (Emphasis in
original.) The representative then urged employees “to continue to work, work
safely, and be patient.” The fact that the Union instructed its members to follow
all safety rules is not enough to demonstrate the Union’s bad faith.
The Company also claims “Union training minutes openly brag about the
[Union’s] slowing of [the Company’s] production” as suggested by The Inside
Game. We find nothing in Union minutes supporting the Company’s claim.
Although the Company does point to a study indicating employee response to call-
outs was down fifty percent in 1997, 7 this study concerns employee conduct after
negotiations had ended; it does not shed any light on Union conduct during
negotiations. The study also indicates call-out response was down only at one of
the Company’s seven or eight locations. The study does not suggest the Company
6
There is also conflicting testimony as to whether a Union representative
admitted using The Inside Game. Even assuming the representative made such an
admission, however, the Company presented no evidence linking this admitted use
with illegal Union activity.
7
A call-out is a call made to employees to restore service after normal
working hours. Employee response to call-outs is a condition of employment.
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as a whole was suffering a decreased call-out response. Finally, the Company
failed to link the decreased call-out response to any concerted action by Union
members.
In sum, the Company has not demonstrated the Union implemented any of
the strategies advocated in The Inside Game. Consequently, we express no
opinion on the legality of The Inside Game strategies. We simply agree with the
administrative law judge and the Board. The evidence in this case does not
demonstrate the Union bargained in bad faith.
Unilateral Implementation of Final Contract Offer
Public Service company argues the National Labor Relations Board erred in
adopting the administrative law judges’s finding that the Company illegally
implemented portions of its final contract offer. The Company argues the judge
incorrectly held the Company was not entitled to implement portions of the offer
because it had not bargained in good faith. The Company further claims an
economic exigency justified its implementation portions of the offer. We will
address each of these arguments in turn.
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A. Impasse
The National Labor Relations Board affirmed the administrative law
judge’s finding that the Company’s implementation of portions of the offer was
unlawful because “the parties were not at a valid impasse in bargaining.” The
Company believes this finding is incorrect because “[t]he record clearly shows
that the parties were realistically at impasse.”
An employer may lawfully “implement all or part of its final offer with
respect to a mandatory subject of bargaining upon an impasse in negotiations.”
Borden, Inc., 19 F.3d at 512. An impasse in negotiations “occurs where the
parties, after good-faith negotiations, have exhausted all prospects of concluding
an agreement.” Id. at 512. An impasse “presupposes a reasonable effort at
goodfaith bargaining.” N.L.R.B. v. Big Three Indus., Inc., 497 F.2d 43, 48 (5th
Cir. 1974). The Board’s conclusion as to whether impasse did or did not exist
will be upheld if supported by substantial evidence. See Borden, Inc., 19 F.3d at
513.
Here, the Company failed to show they were at a valid impasse because the
Company did not satisfy the good faith precondition to impasse. We have already
concluded the Company bargained in bad faith by its rigid adherence throughout
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negotiations to proposals undermining the Union’s representational function. It
was the Company’s bad faith adherence to these proposals, and not legitimate
exhaustion of all possibilities of reaching an agreement, that caused a deadlock in
negotiations. The Board correctly adopted the judge’s finding that the Company
and the Union never reached a valid impasse in bargaining.
Public Service Company argues the administrative law judge found the
Company “did not engage in bad faith bargaining.” Therefore, the Company
claims it reached a valid impasse in bargaining and lawfully implemented its final
contract offer. The Company points to a portion of the administrative law judge’s
order stating the Company did not engage in “surface bargaining” and the
Company’s “bargaining, while perhaps ‘hard,’ does not rise to the level of
inherently unlawful or constitute independent evidence of bad faith.” The
Company misconstrues the judge’s order. The judge did not find the Company
bargained in good faith. The judge simply found the Company’s rejection “of the
status quo” and its resistance to “carryover ... language from the previous
contract” was not “surface bargaining,” “bargaining in violation of the Act,”
“inherently unlawful,” or “independent evidence of bad faith.” The judge went on
to find, however, the Company bargained in bad faith by its “insistence and
dogged defense of ... proposals ... preempt[ing] the Union’s representational
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function.” It was this bad faith conduct, and not rejection of the status quo or
language from the previous contract, that created a deadlock in negotiations and
prevented a valid impasse in bargaining. Since there was no valid impasse, the
Company was not justified in implementing portions of its final contract offer.
B. Economic Exigencies
The Company also argues implementation of portions of the final contract
offer was justified by an economic exigency. Public Service Company claims it
was required by law “to submit a correct and appropriate fiscal operating budget
to the Oklahoma Corporation Commission.” The Company does not claim this
requirement was “sufficient to excuse bargaining altogether” but instead claims it
was an economic exigency that could not “await final agreement or impasse on
the collective bargaining agreement as a whole.”
As a general rule, an employer must bargain in good faith to an impasse on
the entire agreement prior to unilaterally implementing its final contract offer.
See N.L.R.B. v. RBE Elecs. of S.D., Inc., 320 NLRB 80, 81 (1995). The National
Labor Relations Board recognizes an exception to this general rule where an
economic exigency compels prompt action. Id. at 82. Under this exception, an
employer satisfies its duty to bargain by giving the union “adequate notice and an
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opportunity to bargain over the changes it proposes to respond to the exigency
and by bargaining to impasse over the particular matter.” Id. “[T]he exception is
limited only to those exigencies in which time is of the essence.” Id. The
employer must demonstrate “the exigency was caused by external events, was
beyond the employer’s control, or was not reasonably foreseeable.” Id.
We conclude the Company did not give the Union adequate notice of the
alleged economic exigency and failed to bargain to impasse over the contract
changes it proposed to respond to the alleged exigency. In addition, it was the
Company’s bad faith conduct, and not the budget requirement itself, that created
the exigency. The parties began negotiating a new contract almost six months
before the Company felt “serious business needs” required implementation of its
proposals. This was more than enough time for the Company to notify the Union
of its business needs, specifically identify these needs, and perhaps negotiate a
resolution satisfying these needs. Instead, more than four months into
negotiations, the Company finally told the Union it had “serious business needs”
and would “take whatever action ... necessary,” including implementation, to
satisfy these needs. The Company did not identify the nature of these business
needs and failed to give the Union an opportunity to negotiate on proposals it felt
were necessary to satisfy these needs. The Company simply negotiated in bad
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faith, thereby frustrating agreement and wasting valuable negotiating time, until
there was no longer time to adequately address the proposals necessary to submit
a budget to the Oklahoma Corporation Commission. Under these circumstances,
the Company cannot justify its implementation under the economic exigency
exception.
Due Process
Public Service Company argues the allegations against it were not detailed
enough to enable it “to understand the alleged offense and raise a proper
defense.” The Company claims it “had trouble understanding” the complaint
because it did not identify which proposals were illegal. The Company also
claims “it could not successfully defend against such a vague and unfathomable
complaint.” Although the Company fails to cite any law in support of its
argument, we assume it is arguing the Board’s decision violates due process. See
Facet Enters., Inc. v. N.L.R.B., 907 F.2d 963, 972 (10th Cir. 1990). This is a
question of law subject to de novo review. See id. at 970. Due process prohibits
enforcement of the Board’s decision if it is based on a violation “neither charged
in the complaint nor litigated at the hearing.” N.L.R.B. v. I.W.G., Inc., 144 F.3d
685, 689 (10th Cir. 1998). The Board may decide a material issue fairly tried by
the parties, however, even if not specifically pled in the complaint. See Facet
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Enters., Inc., 907 F.2d at 972. Due process is not violated where “it is clear that
the respondent understood the issue and was afforded a full opportunity to justify
its actions.” Id. (quotation marks, alterations, & citations omitted).
After carefully reviewing the record, we conclude the Board’s decision
does not violate due process. Public Service Company had sufficient notice of the
charges against it and an opportunity to defend against them. The charges made
in the complaint and further clarified during the hearing were not “vague and
unfathomable.” The General Counsel for the National Labor Relations Board
repeatedly explained its theory of the case: the Company bargained in bad faith
because it “slavishly adhered” to contract proposals “which centered on not
dealing with the Union .... It never altered its position. It kept on that track.
That track of not having to deal with the Union.”The Company apparently
understood the General Counsel’s theory, acknowledging the Board may examine
“whether or not [boulwarism] 8 has occurred,” and find bad faith if the Company
“obviously offered [regressive proposals] for the purpose of frustrating
agreement.” The Company argued in defense it “tried to build in a process that
8
Boulwarism is “[a] bargaining tactic in which an employer ... make[s] a
firm settlement offer to a union on a take-it-or-leave-it basis, so that there is no
real negotiation.” Black’s Law Dictionary 180 (7th ed. 1999).
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includes the Union ... and that would include agreement”; however, the Company
felt insistence on its contract proposals was justified because, in the face of
deregulation, “[w]e believed and we still believe that the sky is falling, and that if
we don’t make changes and have the ability to make changes, we won’t survive.”
The Board, agreeing with General Counsel, found the Company negotiated in bad
faith “by insisting as a price for any collective-bargaining agreement that its
employees give up their statutory rights to be properly represented by the Union.”
Although the Company may disagree with the Board’s decision, the Board’s
decision was properly based on “a material issue fairly tried by the parties.” See
Facet Enters., 907 F.2d at 972.
Remedy
The Company also argues the Board’s “remedy is unenforceable and
violative of existing Supreme Court and circuit law.” The Board’s power to
fashion a remedy is “a broad, discretionary one, subject to limited judicial
review.” Fibreboard Paper Prods. Corp. v. N.L.R.B., 379 U.S. 203, 216 (1964).
The Board’s remedy should not be disturbed unless it is a patent attempt to
achieve ends inconsistent with the policies of the National Labor Relations Act.
See id. at 215.
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The Company claims the Board’s order “includes the unpled and unlitigated
requirement that [the Company] must include certain ‘representational language’
which clearly includes non-employee subcontractors.” The Company argues the
order illegally requires it to “include non-employees in its [bargaining] unit.” We
reject the Company’s argument. We assume the Company is referring to language
in the order requiring it to “bargain collectively and in good faith” with the
bargaining unit; the order defines the bargaining unit as “[a]ll outside
construction and maintenance employees who work on the [Company’s] property
and power generation employees in operations and in construction and
maintenance, excluding clerical employees, supervisory employees and guards.”
This is the same bargaining unit the Company has dealt with for over fifty years.
The General Counsel for the Board alleged in its consolidated complaint that this
was the “appropriate” bargaining unit. The Company did not deny this allegation
but admitted in its answer “the parties have agreed upon an appropriate unit for
bargaining.” The administrative law judge also identified in its decision the
relevant bargaining unit as the one set forth above. The Company did not dispute
this definition before the judge or the Board. Consequently, even if the Company
did not admit in its answer this was the appropriate bargaining unit, it waived this
argument by not raising it before the judge or the Board. See Walker v. Mather
(In re Walker), 959 F.2d 894, 896 (10th Cir. 1992). Accordingly, we affirm the
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Board’s order. 9
For the reasons stated above, we DENY Public Service Company’s petition
for review. We GRANT the National Labor Relation Board’s cross-application
for enforcement.
9
The Company’s remaining arguments as to why the Board’s order is
“unenforceable” merely restate arguments we already considered and denied in
previous sections of this opinion. There is no need to address these arguments
again.
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