United States Court of Appeals
For the First Circuit
No. 00-1631
THE EDWARD S. QUIRK COMPANY, INC.,
d/b/a QUIRK TIRE,
Petitioner/Cross-Respondent,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent/Cross-Petitioner,
and
TEAMSTERS LOCAL UNION 25,
Intervenor.
ON PETITION FOR REVIEW AND CROSS-APPLICATION OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD
Before
Boudin, Lynch and Lipez,
Circuit Judges.
Terence P. McCourt with whom Laurie J. Hurtt and Hanify &
King, P.C. were on brief for petitioner/cross-respondent.
Robert J. Englehart, National Labor Relations Board, with
whom Leonard R. Page, General Counsel, Aileen A. Armstrong,
Deputy Associate General Counsel, Howard E. Perlstein, Deputy
Assistant General Counsel, and Fred L. Cornnell, Supervisory
Attorney, were on brief for respondent/cross-petitioner.
Joseph A. DeTraglia with whom Matthew E. Dwyer and Dwyer &
Jenkins, P.C. were on brief for intervenor.
February 27, 2001
BOUDIN, Circuit Judge. On this appeal, the Edward S.
Quirk Company ("Quirk") petitions for review of an order of the
National Labor Relations Board (the "Board"). Quirk operates a
tire warehouse and service center in Watertown, Massachusetts.
In 1994, Quirk employed about 40 people, 15 to 20 of whom were
members of Local 25 of the Teamsters (the "union"). When the
existing contract expired in January 1994, the parties, with the
aid of a federal mediator, held bargaining sessions over the
next 18 months, but the union rejected Quirk's final offer for
a new contract on May 18, 1995.
On June 1, 1995, concluding that the parties were at
impasse, Quirk unilaterally implemented the health insurance and
wage proposals included in its final contract offer. The wage
plan at issue (there is no appeal as to wage proposals for
retail workers and the health insurance plan) provided that
Quirk's commercial employees would "be paid at a base rate of
not less than $8.90 an hour, however, the Company may continue
its current marketplace pay practices . . . ." During the
previous contract term, Quirk had increased wages above contract
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rates to stay competitive with other tire businesses in the
area.
Thereafter, Quirk and the union clashed on a number of
issues. Starting in August 1995, the Board's general counsel
filed several charges against Quirk, including claims that
Quirk had committed unfair labor practices by unilaterally
implementing its commercial wage plan (in June 1995) and by
discharging Kenneith Jones, who had been acting as the union's
shop steward (in March 1996). These claims (and the other
charges) were heard by an administrative law judge at a three-
day hearing in December 1996.
On January 29, 1998, the ALJ found that Quirk had
committed a number of violations, two of which are pertinent to
this appeal. First, it found that Quirk's implementation of the
commercial wage plan violated section 8(a)(5) of the National
Labor Relations Act (the "Act"), 29 U.S.C. § 158(a)(5) (1994),
which makes it an unfair labor practice for an employer "to
refuse to bargain collectively with the representatives of his
employees." Second, Jones's discharge was found to be a
violation of section 8(a)(3) of the Act, id. § 158(a)(3), which
prohibits an employer from discriminating against an employee in
any "term or condition of employment to . . . discourage
membership in any labor organization."
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The Board summarily affirmed the ALJ's decision on
these two issues as on most of the other charges. Edward S.
Quirk Co., 330 N.L.R.B. No. 137 (2000), available at 2000 WL
309115, at *1. Quirk's petition for review contests the Board's
action as to both the wage plan and the firing of Jones, but
only the first of these claims warrants much discussion. The
Board's orders are reviewable for mistakes of law, lack of
substantial evidence to support factual findings, and arbitrary
or capricious reasoning.1
We begin with the wage plan. Under the Act, an
employer is required to bargain collectively on a range of
issues, including wages, and it is ordinarily a violation of
this duty for the employer to make unilateral changes. Litton
Fin. Printing Div. v. NLRB, 501 U.S. 190, 198 (1991).
Nevertheless, where good-faith negotiations have led to an
impasse, an employer can unilaterally implement its pre-impasse
proposals, subject to qualifications. See American Fed'n of
Television & Radio Artists v. NLRB, 395 F.2d 622, 624 (D.C. Cir.
1968). The reason is that a union would otherwise be able to
freeze an employer into an expired contract through a
"unilateral veto" over adjustments. Colorado-Ute Elec. Ass'n v.
1
See 29 U.S.C. § 160(e); NLRB v. Beverly Enters.-Mass.,
Inc., 174 F.3d 13, 23 (1st Cir. 1999); Union Builders, Inc. v.
NLRB, 68 F.3d 520, 522 (1st Cir. 1995).
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NLRB, 939 F.2d 1392, 1404 (10th Cir. 1991), cert. denied, 504
U.S. 955 (1992).
Among the qualifications on this "right" of employers
is the so-called McClatchy exception.1 In that case, the D.C.
Circuit said that the Board could, even in the face of an
impasse, refuse to allow the employer to adopt a new wage plan
that effectively gave the employer carte blanche to pay almost
anything it liked and to change wage rates thereafter at will.
The Board said that an employer may not unilaterally implement
wage proposals "that confer on an employer broad discretionary
powers that necessarily entail recurring unilateral decisions
regarding changes in the employees' rates of pay." McClatchy
II, 321 N.L.R.B. at 1388.
The reasons for this limitation, on the part of both
the Board and the D.C. Circuit, are highly pragmatic. The Board
thinks that allowing a succession of unilateral changes by the
employer, as opposed to an initial change, would make a union
seem impotent to its members over time and further undermine the
1The exception ultimately adopted by the Board and upheld by
the D.C. Circuit can be found in McClatchy Newspapers, Inc. v.
NLRB, 321 N.L.R.B. 1386, 1390-92 (1996) ("McClatchy II"),
enforced, 131 F.3d 1026 (D.C. Cir. 1997), cert. denied, 524 U.S.
937 (1998). An earlier approach by the Board was disallowed.
McClatchy Newspapers, 299 N.L.R.B. 1045, 1048 (1990) ("McClatchy
I"), enf. denied, 964 F.2d 1153, 1154 (D.C. Cir. 1992).
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union's bargaining ability by creating uncertainty about
prevailing terms.
By contrast, permitting one set of unilateral changes per
impasse lets the employer make an initial adjustment, but forces
it to bargain again with the union if it wishes to make further
adjustments down the road. See McClatchy II, 321 N.L.R.B. at
1391; see also Detroit Typographical Union No. 18 v. NLRB, 216
F.3d 109, 117 (D.C. Cir. 2000).
In this case, the Board agreed that an impasse had been
reached in May 1995 when Quirk implemented its wage plan, but it
viewed the wage plan as one that retained too much employer
discretion to meet the McClatchy test. Quirk, 2000 WL 309115,
at *1 & n.2. In response, Quirk first says that the Board is
not entitled to impose the McClatchy qualification at all and
that McClatchy is contrary to Supreme Court precedent; and
second, it argues that even if McClatchy is sound, the proposal
Quirk actually implemented is not so discretionary as to violate
McClatchy and the Board was arbitrary and capricious in its
contrary determination.
Quirk has not properly preserved the broader of the two
objections. It did not squarely raise this broader claim before
the Board, which means that it forfeited the objection unless
adequately excused, see 29 U.S.C. § 160(e); Woelke & Romero
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Framing, Inc. v. NLRB, 456 U.S. 645, 665 (1982). Quirk's claim
that it did raise the issue with the Board is refuted by
examining the brief it filed with the Board; and its alternative
position--that the Board would have adhered to McClatchy anyway-
-is an excuse that has been roundly rejected by the Supreme
Court, United States v. L.A. Tucker Truck Lines, Inc., 344 U.S.
33, 37 (1952); see also Sousa v. INS, 226 F.3d 28, 32 (1st Cir.
2000).2
Nevertheless, Quirk's attack on McClatchy is
unimpressive. Nothing in the Act explicitly gives the employer
the right to impose its last offer unilaterally at impasse.
Arguably some inferences can be drawn from the statute's concept
of what collective bargaining is about and the limits of Board
power; but the "right" largely reflects a judgment by the Board
and courts as to workable balance rather than anything very
specific in the Act. See Laborer Health & Welfare Trust Fund v.
Advanced Lightweight Concrete Co., 484 U.S. 539, 543-44 n.5
(1988); McClatchy II, 131 F.3d at 1032 n.4.
Yes, the courts have said that the Board should promote
bargaining and is not entitled to impose on the parties its own
2
There is equally little merit to Quirk's contention that
its statutory objection is a mere variation of an argument it
made to the Board. See Joseph T. Ryerson & Son, Inc. v. NLRB,
216 F.3d 1146, 1151 (D.C. Cir. 2000).
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substantive judgment as to terms. NLRB v. American Nat'l Ins.
Co., 343 U.S. 395, 404 (1952); cf. 29 U.S.C. § 158(d). But
McClatchy is designed to promote bargaining by requiring
management to return to the table at some later stage. Employer
discretion in setting wages is fine if the parties agree: it is
the unilateral use of such a plan to impair further bargaining
that concerns the Board. McClatchy has been upheld by one
circuit, McClatchy II, 131 F.3d at 1034-35, endorsed by another,
Retlaw Broad. Co. v. NLRB, 172 F.3d 660, 668 (9th Cir. 1999),
and rejected by none.
Quirk's claim that an employer has an unqualified right
to make such unilateral changes rests on out-of-context
quotations from Supreme Court decisions. Neither of the two
cases cited, American Nat'l Ins. Co., 343 U.S. at 404; Laborers
Health & Welfare Trust Fund, 484 U.S. at 543-44 & n.5, rejected
the Board's authority to impose reasonable restrictions on an
employer's right to make unilateral changes in the face of
impasse. The Supreme Court itself has (in a different context)
approved at least one limitation on unilateral changes after
impasse, see Charles D. Bonanno Linen Serv., Inc. v. NLRB, 454
U.S. 404, 418-19 (1982) (no unilateral withdrawal from multi-
employer bargaining).
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Whether McClatchy applies in this case is a more
troubling question. The commercial wage plan adopted by Quirk
did not on its face reserve full discretion to Quirk to change
pay rates. Quirk proposed to continue its "current marketplace
pay practices" while promising employees that they would never
be paid less than $8.90 per hour. It is not clear whether the
Board is concerned with the "current marketplace pay" standard,
or the $8.90 option, or something else.
The Board may think that the phrase "marketplace pay"
is too vague and effectively reserves discretion to management
to change wage rates at will, so long as they remain greater
than $8.90. But if a contract for a commodity provided that a
price would be "the current market price" for the good, this
might well be a figure precise enough for a court or arbitrator
to enforce. See Coca-Cola Bottling Co. v. Coca-Cola Co., 988
F.2d 386, 412-13 (3d Cir.), cert. denied, 510 U.S. 908 (1993);
cf. Elkouri & Elkouri, How Arbitration Works, 1106-08 (Volz &
Goggin eds., 5th ed. 1997). And, as to keeping the union
abreast, a Teamsters local is likely to know very well what wage
rates in a community are for the job or jobs in question.
Alternatively, the Board may have been concerned that
even if marketplace pay was a sufficiently definite standard--or
could be made so through the arbitration and grievance
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procedure--Quirk was reserving too much discretion to itself by
providing that it could choose between marketplace pay and $8.90
per hour. One would think that providing a floor would be a
clear-cut benefit to employees and that in practice Quirk could
hardly pay less than the marketplace wage. In all events, if
the "may" is the Board's concern, Quirk is entitled to know this
(it could eliminate the floor next time) and the reviewing court
is entitled to know why the floor is excessive discretion.
The briefs filed by the Board and the union suggest yet
other concerns. One is that the use of marketplace pay
standards, even if the standards are precise, would provide
disparate pay for workers who would normally be grouped in
categories under a negotiated contract; another is that Quirk's
proposal might somehow be read to reserve to it a third option--
neither marketplace pay nor a floor but an unrestricted right to
pay whatever Quirk desired. If these were the concerns, they
are not spelled out by the Board, and it is the Board's
rationale that matters. See SEC v. Chenery Corp., 318 U.S. 80,
87-88 (1943).
The Board did not explain its reasoning but simply
adopted the ALJ's position. See Quirk, 2000 WL 309115, at *1.
The ALJ, in turn, summarily applied the McClatchy label to
Quirk's wage plan, saying that the Board in McClatchy condemned
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wage proposals "like the one here," adding that the new plan
allowed changes "without any established criteria." Id. at *19-
*20. But in McClatchy, the Board condemned a wage plan that
allowed wages to be determined in a way that "kept most raises
in McClatchy's complete discretion," McClatchy II, 131 F.3d at
1028, and the Quirk plan appears to contain more in the way of
standards.
Quirk says that its freedom of choice under the wage
plan is constrained because management's determinations remain
subject to binding grievance and arbitration provisions. If
this means that the marketplace wage for the job could be
determined by a neutral third party, this would appear to be a
significant limit on Quirk's discretion--one that was not
present in McClatchy itself. See McClatchy I, 299 N.L.R.B. at
1048; see also Colorado-Ute, 939 F.2d at 1395. The ALJ and the
Board are silent on this subject.
Quirk also contends that the Board now mechanically
invokes the McClatchy exception without regard to the facts.
Consonantly, the D.C. Circuit not long ago criticized the Board
for "simply brandish[ing] McClatchy, without any real
explanation . . . ." Detroit Typographical, 216 F.3d at 118.
The Board counters that the same court recently upheld the
Board's application of McClatchy in Anderson Enterprises, 329
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N.L.R.B. No. 71 (1999), available at 1999 WL 883896, at *29-*33.
But the employer there claimed an almost unlimited authority to
vary wage rates and, by contrast to this case, the Board fully
discussed the proposal.
McClatchy is based on employer discretion and
discretion is a matter of degree, implicating policy judgments
informed by Board expertise. However, Quirk's plan is at least
narrower than that in McClatchy, and the Board owes the employer
and a reviewing court something more of a reasoned explanation
of where it draws the line and why the line has been crossed in
this instance. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983); Detroit Typographical,
216 F.3d at 118. This would also give guidance to other
employers facing similar problems in the future.
The other claim of error by Quirk is directed to the
Board's ruling that Jones was fired because of his union
activity. In concluding that this was so, the ALJ relied on
evidence of anti- union activities by Quirk, Jones's union
responsibilities, direct evidence of hostility to Jones because
of his union activities, and the thinness of Quirk's avowed
explanation for discharging Jones, namely, that his actions
showed that he had decided to quit. Quirk, 2000 WL 309115, at
*20-*31. Jones, whom the ALJ credited, said that he had been
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told to go home and then was formally fired two days later. Id.
at *31.
The Board's findings were amply supported by
substantial evidence, and the inference that Quirk fired Jones
because of his union activities was legitimate. Quirk's claim
on appeal is that the firing was done by a new supervisor, one
David Bradley, who allegedly did not know of Jones's union
activities. But Bradley consulted with Peter Quirk before
telling Jones to go home and before sending him a termination
letter, and the final call to Jones asking him to turn in his
keys and uniforms was delivered by another manager. Under such
circumstances, the Board was not required to believe Bradley's
testimony that he alone made the decision.
For the reasons stated, the Board's order is vacated
insofar as it pertains to the commercial wage plan and remanded
for further proceedings consistent with this opinion; and the
order is enforced so far as it concerns Jones's termination.
Each party shall bear its own costs.
It is so ordered.
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