Burns Intl Sec Svc v. NLRB

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 4, 1998 Decided June 12, 1998

No. 97-1638

Burns International Security Services,

Petitioner

v.

National Labor Relations Board,

Respondent

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Thomas J. Piskorski argued the cause and filed the briefs
for petitioner.

Robert J. Englehart, Attorney, National Labor Relations
Board, argued the cause for respondent, with whom Linda
Sher, Associate General Counsel, Aileen A. Armstrong, Depu-
ty Associate General Counsel, and Frederick C. Havard,

Supervisory Attorney, were on the brief. Frederick L. Corn-
nell, Jr., Attorney, entered an appearance.

Before: Edwards, Chief Judge, Silberman and Sentelle,
Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: This case presents the narrow
question whether, under established case law, the National
Labor Relations Board ("NLRB" or "Board"), may decide a
refusal to bargain unfair labor practice claim, arising under
sections 8(a)(5) and 8(a)(1) of the National Labor Relations
Act ("NLRA" or "Act"), 29 U.S.C. ss 158(a)(5), (1), where an
employer acts pursuant to a viable claim of right under a
collective bargaining agreement ("CBA"), the matter in dis-
pute is covered by the arbitration clause in the CBA, and the
employer unconditionally seeks submission of the dispute to
arbitration. On the facts at hand, the Board should have
deferred to arbitration. Because the Board gave no good
reason for failing to follow well-established case law, we grant
the employer's petition for review.

I. Background

During the time period relevant to this appeal, Burns
International Security Services ("Burns" or "employer") pro-
vided security guard services at a nuclear power plant owned
by Yankee Atomic Electric Services in Rowe, Massachusetts
("Yankee Rowe"). Approximately 20 Burns employees at
Yankee Rowe were represented by a union affiliated with
United Government Security Officers of America ("Union").
Burns and the Union had a CBA that ran from January 23,
1991, to December 10, 1993.

Under the "Holidays" clause (article XV) of the CBA, the
parties had agreed that holiday pay would be paid to "regular
full-time employees" who completed the last regularly sched-
uled work day before a given holiday and the first regularly
scheduled work day after such holiday.1 For a number of

__________
1 The Holidays clause states, in pertinent part:

years, however, Burns had granted holiday pay to employees
who were out on workers' compensation leave, i.e., notwith-
standing the fact that such employees had not actually
worked the days immediately preceding and immediately
following the holiday. In late 1993, Burns discovered that it
was not required by state law to give holiday pay to employ-
ees on workers' compensation. Subsequently, Burns refused
to pay three unit employees, who were then receiving work-
ers' compensation, for the 1993 Thanksgiving holiday. On
December 23, 1993, Burns sent a letter, dated December 10,
1993, to the affected employees, notifying them of the change
in policy. In early January 1994, the Union's president
learned about this change when one of the three affected
employees showed him a copy of Burns' letter. Neither the
Union nor any of the affected employees sought to grieve the
issue under the CBA.

Meanwhile, in late 1993 and during the first few months of
1994, Burns and the Union attempted to negotiate a new
contract to replace the CBA which had expired on December
10, 1993. These negotiating efforts faltered, however, and, on
March 9, 1994, the Union called a strike. The striking
employees had marked their pro-strike ballots to show that
they based their votes, at least in part, on alleged unfair labor
practices committed by Burns, including "unilateral changes."
J.A. 13. On March 30, 1994, the Union voted to end the
strike, and, on April 1, 1994, Burns received unconditional
offers to return to work from all the striking employees.
Burns did not immediately reinstate the employees, however,
because by then the company had hired replacements.

__________
A regular full-time employee who has successfully completed
his six (6) month probationary period [is entitled to holiday
pay].

....

In order to receive [holiday pay], the employee must fully
complete his last regularly scheduled work day before the
holiday itself and first regularly scheduled work day after the
aforesaid holidays [sic].

Joint Appendix ("J.A.") 690-91.

On April 21, 1994, the Union filed a charge with the NLRB,
and a complaint issued, alleging that Burns committed unfair
labor practices by changing the practice covering holiday pay
for employees on workers' compensation and by refusing to
reinstate the strikers. In a decision issued on September 30,
1996, an administrative law judge ("ALJ") found that Burns
had failed "to bargain collectively" with the Union pursuant to
sections 8(a)(5) and 8(d) of the NLRA, 29 U.S.C. ss 158(a)(5),
(d), and thereby committed an unfair labor practice under
sections 8(a)(5) and 8(a)(1) of the Act, by unilaterally discon-
tinuing the holiday pay. The ALJ also found that Burns'
discontinuance of holiday pay was a "contributing" cause of
the strike and, therefore, Burns violated sections 8(a)(3) and
8(a)(1) of the Act, 29 U.S.C. ss 158(a)(3), (1), by refusing to
reinstate the strikers immediately upon their unconditional
offer to return to work on April 1, 1994. See J.A. 14.

The ALJ rejected Burns' arguments that the CBA autho-
rized the company's holiday pay action. The judge also
dismissed the contention that the Union had waived its right
to bargain over holiday pay for employees on workers' com-
pensation through a "Waiver" clause (article XXVII), also
known as a "zipper" clause, contained in the CBA.2

__________
2 The Waiver or zipper clause states:

The parties acknowledge that during the negotiations which
resulted in this Agreement, each had the unlimited right and
opportunity to make demands and proposals with respect to
any subject or matter not removed by law from the area of
collective bargaining, and that the understanding and Agree-
ments arrived at by the parties after the exercise of that right
and opportunity are set forth in this Agreement. Therefore,
the Employer and the Union, for the life of this Agreement,
each voluntarily and unqualifiedly waives the right and each
agrees that the other shall not be obligated to bargain collec-
tively with respect to any subject or matter not specifically
referred to or covered in this Agreement, even though such
subjects or matters may not have been within the knowledge or
contemplation of either or both of the parties at the time they
negotiated or signed this Agreement.

J.A. 9; J.A. 701-02.

Finally, the ALJ rejected Burns' contention that the issue
of holiday pay was subject to arbitration. The judge first
questioned whether the holiday pay dispute "was even arbi-
trable," on the assumption that holiday pay for employees on
workers' compensation was an extra-contractual benefit. J.A.
15. Without resolving this point, the ALJ held that the
dispute need not be submitted to arbitration, because Burns
had notified the Union by letter dated December 27, 1993,
that it did not consider itself subject to binding arbitration
without a new collective bargaining agreement. See J.A. 15-
16.

The Board adopted the analysis and recommendations of
the ALJ with minor modifications. See Burns Int'l Security
Servs., 324 NLRB No. 89 (Sept. 29, 1997) ("Order"), reprinted
in J.A. 7-17. Although Burns again claimed that the dispute
should be submitted to arbitration, the Board did not specifi-
cally address the arbitration argument. The Board ordered
Burns to make whole all employees who were wrongly denied
holiday pay and to reinstate all striking employees who had
not yet been returned to their jobs. This petition for review
and cross-application for enforcement of the Board's order
followed.

II. Discussion

It is well settled that when an employer defends against a
refusal to bargain charge by contending that its actions were
authorized by the collective bargaining agreement, the refusal
to bargain charge presents an issue of contract interpretation.
See, e.g., Utility Workers Union v. NLRB, 39 F.3d 1210, 1215
(D.C. Cir. 1994). In Collyer Insulated Wire, 192 N.L.R.B.
837 (1971), the Board established the general rule, repeatedly
affirmed by this court, that it will refrain from initiating an
unfair labor practice proceeding if the collective bargaining
agreement provides for arbitration as the method of resolving
disputes over the meaning of the agreement. See McDonnell
Douglas Corp. v. NLRB, 59 F.3d 230, 233-34 (D.C. Cir. 1995);
NLRB v. United States Postal Service, 8 F.3d 832, 837 (D.C.
Cir. 1993); Hammontree v. NLRB, 925 F.2d 1486, 1490-91
(D.C. Cir. 1991) (en banc).

Under Collyer and its progeny, there is little doubt that the
Board should have deferred the dispute over the holiday pay
action to arbitration. Burns contends that two provisions of
the CBA read together authorized its decision to eliminate
holiday pay for employees on workers' compensation. Burns
points, first, to the Holidays clause, which explicitly provides
that holiday pay will be given only to "regular employees"
who meet certain other requirements with respect to the
particular holiday for which pay is sought. Burns also relies
on the Management Rights clause (article II), which provides,
in pertinent part:

This Agreement shall not be construed to infringe or
impair any of the normal management rights of the
Employer which are not inconsistent with the provisions
of this Agreement. Included among management rights
... is the right to change existing business practices....
The right of the Employer to make rules and regulations
not in conflict with this Agreement as it may from time
to time, deem best for the purpose of maintaining order,
safety and/or effective operations, and after advance
notice thereof to the Union and to the employees, to
require compliance therewith by employees is recog-
nized.

J.A. 9-10 n.3; J.A. 665-66. An arbitrator plausibly might
conclude from these provisions that Burns, upon discovering
in late 1993 that state law did not require it to pay employees
on workers' compensation for holidays, was authorized by the
CBA to cease making those payments. The Union, in turn,
could claim that the Holidays clause was not inconsistent with
the employer's holiday pay practices and so the employer
should be bound to continue established past practices. In
short, the claim that Burns had no right to eliminate holiday
pay for certain employees undoubtedly presents a dispute
over the proper interpretation of the CBA.

Burns also argues that the holiday pay issue is one that the
company and the Union agreed to make subject to grievance
and arbitration procedures under the terms of the CBA. See
Br. of Petitioner at 7. Article VII of the CBA, entitled

"Grievance and Arbitration Procedure," sets forth a multi-
step procedure for resolving a dispute between the employer
and an employee or the Union regarding "the meaning or
application of" the CBA. J.A. 670. The final step of the
procedure is arbitration, with the arbitrator's award being
"final and binding." J.A. 674. The Board does not dispute,
and we agree, that a disagreement over the meaning of the
Holidays and Management Rights clauses is subject to arbi-
tration under the CBA. See AT&T Technologies v. Commu-
nications Workers, 475 U.S. 643, 650 (1986) (arbitration
clause in collective bargaining agreement gives rise to "pre-
sumption of arbitrability") (citing Steelworkers v. Warrior &
Gulf Co., 363 U.S. 564, 582-83 (1960)); Collyer, 192 N.L.R.B.
at 842.

Finally, it is clear that Burns raised the issue of arbitration
before the Board. In its amended answer to the General
Counsel's complaint, Burns stated as an alternative defense
that: "In the case of the unfair labor practices alleged
[arising out of the discontinuance of holiday pay], the Union
failed to pursue a grievance. The employer remains willing
to waive any procedural barriers to arbitration of said
dispute, and the matter should be deferred to arbitration."
Amended Answer to Complaint (Sept. 8, 1995), reprinted in
J.A. 597 (emphasis added). Thus, this case is unlike Postal
Service, in which the employer never claimed that the Board
should have deferred to arbitration. See Postal Service, 8
F.3d at 837. In those circumstances, we held that the Board
had authority to interpret the relevant contract for purposes
of deciding the unfair labor practice charge. See id. Here,
by contrast, Burns argued to the ALJ, to the Board, and to
this court, that the Board should defer, because the holiday
pay issue raised an arbitrable dispute. Given the contractual
nature of the holiday pay dispute and Burns' unambiguous
and unconditional request for arbitration, we agree that the
Board should have deferred.

The Board, in rejecting Burns' defenses, appeared to adopt
the theory that the issue of holiday pay for employees on
workers' compensation was not "contained in" the CBA within
the meaning of section 8(d) of the Act, 29 U.S.C. s 158(d).

The Board thought that, because Burns had developed a
"past practice" of granting holiday pay that was arguably
separate from the explicit terms of the CBA, the company
could not change the existing holiday pay arrangement with-
out agreement from the Union. In other words, the Board
thought that holiday pay for employees on workers' compen-
sation was outside the scope of the CBA, so there was no
contractual term that required interpretation in arbitration.

We reject the Board's theory. We first note, however, that
in argument before this court, Board counsel confused the
issue by suggesting that the disputed holiday pay practice
was an "implied term" of the CBA. If, as Board counsel
suggested, the holiday pay practice was an implied term, then
undoubtedly it was "contained in" the CBA and the dispute
over its meaning should have been submitted to arbitration.
See generally Consolidated Rail Corp. v. Railway Labor
Executives' Ass'n, 491 U.S. 299, 311 (1989) ("[C]ollective
bargaining agreements may include implied as well as ex-
press terms."); Bonnell/Tredegar Indus., Inc. v. NLRB, 46
F.3d 339, 344 (4th Cir. 1995) ("An employer's established past
practice can become an implied term of a collective bargain-
ing agreement.") (citing cases); Elkouri & Elkouri, How
Arbitration Works 632 (5th Ed. 1997) (surveying circum-
stances in which arbitrators give employer custom " 'binding
practice' effect as an implied term of the agreement").

In any event, the Board's analysis, predicated on the
assumption that the discontinued holiday pay was extra-
contractual, is patently flawed. The relevant inquiry in this
case is whether Burns acted on a viable claim of right under
the parties' CBA in eliminating the holiday pay practice. So
long as the employer plausibly claims contractual justification
for its actions under the express or implied terms of the CBA,
and the matter in dispute is subject to arbitration, then the
Board should leave the parties to their contract remedies
unless the employer refuses to go to arbitration. See Harry
T. Edwards, Deferral to Arbitration and Waiver of the Duty
to Bargain; A Possible Way Out of Everlasting Confusion at
the NLRB, 46 Ohio St. L.J. 23, 32-35 (1985). This is not a
case in which the employer, relying solely on a zipper clause

that did no more than waive the duty to bargain, sought to
take unilateral action with respect to a mandatory subject of
bargaining not contained in the CBA. See United Auto
Workers v. NLRB, 765 F.2d 175, 183 (D.C. Cir. 1985) ("Al-
though a zipper clause may waive the obligation to bargain
over all mandatory subjects during the term of an agreement,
it surely does not waive the union's right to object to an
employer's taking unilateral action with respect to such sub-
jects."). Here, the employer plausibly relied on the Holidays
and Management Rights provisions in claiming an issue prop-
er for arbitration.

The Board also thought it could resolve the failure-to-
bargain claim because of Burns' letter to the Union, dated
December 27, 1993, which stated, "absent a new agreement,
Burns is not bound by and would not recognize binding
arbitration for any disputes which may arise in the grievance
procedure." Letter from Guy R. Thomas, Labor Relations
Manager, Burns International Security Services, to James A.
Vissar, President, International Union, United Government
Security Officers of America (Dec. 27, 1993), J.A. 715; see
Order, J.A. 15-16. The Board's position on this point is
meritless. It is undisputed that Burns implemented its new
holiday pay policy in November 1993, before the CBA expired.
Thus, Burns' letter, written after expiration of the CBA, does
not support the Board's conclusion that Burns had "disa-
vowed its obligation to process" a grievance based on the
holiday pay dispute pursuant to article VII of the CBA.
Order, at J.A. 16. The letter only served to notify the Union
that Burns would not recognize arbitration for issues arising
after the expiration of the CBA, as long as there was no
replacement CBA. Indeed, as the ALJ and Board found, the
Union officials themselves informed the membership at the
strike-vote meeting on March 9, 1994, that Burns "had noti-
fied the Union in December that it would not arbitrate any
grievances that arose after the contract expired." Id. at J.A.
13 (emphasis added).

In short, there is nothing in the record to suggest, nor did
the ALJ or the Board ever claim, that Burns ever refused to
arbitrate an issue that arose during the course of the CBA.

Indeed, had the Union sought to grieve the holiday pay action
pursuant to the expired CBA, it is doubtful Burns would have
had a plausible legal basis to refuse such a request. See
Litton Financial Printing Div. v. NLRB, 501 U.S. 190, 205-
06 (1991) ("A postexpiration grievance can be said to arise
under the contract ... where it involves facts and occur-
rences that arose before expiration...."). Goya Foods, Inc.,
238 N.L.R.B. 1465 (1978), says nothing to the contrary (as the
ALJ seemed to think), nor does it support the Board's
suggestion that ongoing arbitration proceedings are a prereq-
uisite to the enforcement of a CBA's arbitration clause.

Under Collyer and its progeny, the Board was required to
defer to arbitration, plain and simple. The Board has not
pointed to any factual circumstances which, under established
case law, would weigh against a decision to defer to arbitra-
tion. See Hammontree, 925 F.2d at 1490 (suggesting condi-
tions where deferral to arbitration may be inappropriate)
(citing Collyer, 192 N.L.R.B. at 842). Indeed, arbitration is
ideally suited to resolving the type of contractual dispute
decided by the Board in this case.

Because the Board erred in resolving the failure-to-bargain
charge, there is no basis for the Board's conclusions that the
strike by employees at Yankee Rowe was an unfair labor
practice strike, and that Burns violated sections 8(a)(3) and
8(a)(1) by failing to immediately reinstate the strikers upon
their unconditional offer to return to work. Thus, we need
not address the question whether substantial evidence sup-
ports the Board's finding that the holiday pay dispute was a
contributing cause of the strike.

III. Conclusion

For the foregoing reasons, we grant Burns' petition for
review and deny the Board's cross-application for enforce-
ment.