United States Court of Appeals
For the First Circuit
No. 08-1351
PAN AMERICAN GRAIN CO., INC. and
PAN AMERICAN GRAIN MANUFACTURING COMPANY, INC.,
Petitioners, Cross-Respondents,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent, Cross-Petitioner.
ON PETITION FOR REVIEW OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD
Before
Boudin, Stahl, and Lipez,
Circuit Judges.
Rafael J. Lopez with whom Ruperto J. Robles was on brief for
petitioner.
Greg P. Lauro with whom Meredith L. Jason, Ronald Meisburg,
General Counsel, John E. Higgins, Jr., Deputy General Counsel, John
H. Ferguson, Associate General Counsel, Linda Dreeben, Deputy
Associate General Counsel, and National Labor Relations Board were
on brief for Respondent, Cross-Petitioner.
February 24, 2009
STAHL, Circuit Judge. Pan American Grain Company, Inc.
and Pan American Grain Manufacturing Company (collectively, "Pan
American" or "the company")1 petition this court to set aside an
order of the National Labor Relations Board ("the Board"). The
Board submits a cross-application to enforce its order. We
previously vacated and remanded the Board's order finding that Pan
American, a Puerto Rican company, committed violations under the
National Labor Relations Act ("the Act"), 29 U.S.C. §§ 151 et seq.,
when it did not provide its employees with adequate notice and a
reasonable opportunity to bargain before imposing layoffs.
N.L.R.B. v. Pan Am. Grain Co., 432 F.3d 69 (1st Cir. 2005). Now,
satisfied with the Board's supplemental decision and order issued
in response to our remand, we deny Pan American's petition for
review and grant the Board's cross-application for enforcement.
I.
The background facts of this case are discussed at
greater length in our first examination of the Board's order, see
id., and here, we relate them summarily. On January 8, 2002,
employees at two Pan American facilities began a strike after
negotiations failed at reaching a new collective bargaining
agreement between Pan American and the exclusive bargaining
representative for its employees, the Congreso de Uniones
1
Pan American Grain Company, Inc. and Pan American Grain
Manufacturing Company are affiliated business enterprises and share
officers, directors, and a common policy for operations.
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Industriales de Puerto Rico ("the Union"). That same month,
company president Jose Gonzalez spoke with two nonstriking truck
drivers; during the conversation, Gonzalez stated that he "would
rather close the company" than reach an agreement with the striking
employees, called the strikers "jerks" and "sons of bitches," and
indicated he would not be concerned if it cost $2 million to rid
the company of them. On February 27, 2002, Pan American notified
the Union that it had decided to lay off fifteen striking
employees. A letter from Pan American to the Union, dated the same
day, stated that the layoffs were "due to economic reasons and as
a result of a substantial decrease in production and sales."
Gonzalez later confirmed that sales dropped in January and February
2002 and conceded that the reduced level of sales caused the
company to require "a lower work force."
Previously, in 1996, Pan American had begun to modernize
its facilities' equipment to satisfy an environmental order which
required significant changes in how the company conducted its
business operations. The modernization resulted in decreased
staffing needs and a reduction of one or two employees in each
succeeding year. After the February 27 layoffs, Pan American
initially did not cite its modernization program as a reason for
the layoffs. But after the Union filed unfair labor charges with
the Board, Pan American contended before a Board administrative law
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judge ("ALJ") that the layoffs were attributable to the
modernization program.
After a thirty-two-day trial, the ALJ found that Pan
American had violated the Act "by implementing the February 27
layoff without giving the Union adequate notice and reasonable
opportunity to bargain."2 Although the ALJ found the evidence of
modernization and automation compelling enough to rebut a
discrimination claim under 29 U.S.C. § 158(a)(3), the judge
determined the striking employees were engaged in protected
activity, found that antiunion animus existed, and noted that the
timing of the layoffs in relation to the commencement of the strike
was "somewhat suspicious" in reaching his conclusion that Pan
American's February 27 layoffs violated the Act under 29 U.S.C. §
158(a)(5).3 As a remedy for the violation, the ALJ ordered full
backpay to and reinstatement of the fifteen employees. The Board
affirmed the ALJ's ruling and adopted the recommended order.
2
The Union alleged other violations, roughly half of which
the ALJ found substantiated. These violations are not at issue in
the instant appeal as Pan American has not contested them. See Pan
Am. Grain, 432 F.3d at 71, n.2.
3
"It shall be an unfair labor practice for an employer--to
refuse to bargain collectively with the representatives of his
employees." 29 U.S.C. § 158(a)(5). See also id. at § 158(d)
("[T]o bargain collectively 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.").
-4-
On its first appeal to this court, Pan American asserted
that because of the role of its modernization program in the
layoffs, it was not required to bargain over the decision to
terminate the fifteen employees, only over the effects of the
layoffs, see generally First Nat'l Maint. Corp. v. N.L.R.B., 452
U.S. 666 (1981), and that the appropriate remedy therefore was
limited backpay as prescribed in Transmarine Navigation Corp., 170
N.L.R.B. 389 (1968). A majority of the panel4 held that the Board
had not sufficiently explained why Pan American had to bargain over
a decision motivated both by reduced sales and a modernization
program. Pan Am. Grain Co., 432 F.3d at 74. We thus remanded the
case to the Board for clarification of how multiple motives for a
layoff should be analyzed and whether the Board viewed
modernization decisions as mandatory subjects of bargaining.
In its supplemental decision and order, the Board found
that "a combination of factors, including a substantial reduction
in sales in January and February 2002. . . coinciding with the . .
. strike" led to the February 27 layoffs such that the layoffs were
motivated by reasons other than efficiency gains from
modernization. The Board held that "because [Pan American] failed
4
The dissent argued that Pan American's objections before the
Board were insufficient to apprise the Board that the company would
later argue that it had no duty to bargain about the decision. Pan
American Grain Co., 432 F.3d at 75 (Stahl, J., dissenting). On
remand, the Board observed that it too had understood Pan
American's argument to be waived by its failure to present the
argument to the Board in its exceptions to the ALJ's decision.
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to establish it would have implemented any particular layoff solely
as a result of modernization and even in the absence of its
economic reasons, [it] had a duty to bargain over the February 27
layoff decision." The Board noted that it would have addressed
this court's question of whether a company must bargain over
layoffs arising solely because of modernization had Pan American
established that any particular layoff was based exclusively on the
modernization program. Based on this reasoning, the Board again
found that Pan American had a duty to bargain with the Union over
the decision to lay off fifteen employees, which "unquestionably
affected the terms of unit employees' employment in a material and
substantial way," and held that the company's unilateral
implementation of the layoffs violated Sections 8(a)(5) and (1) of
the Act. The Board again ordered a full backpay remedy.
II.
We now consider whether the Board complied with our
remand and sufficiently clarified its reasoning such that its
finding that Pan American violated Sections 8(a)(5) and (1) of the
Act and the subsequent remedial order are justified. The Board has
the primary responsibility for determining the scope of an
employer's statutory duty to bargain, Ford Motor Co. v. N.L.R.B.,
441 U.S. 488, 496 (1979), and we will affirm the Board's statutory
construction so long as it is "reasonably defensible," id. at 497.
See Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 488 (1951)
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("[A] court may [not] displace the Board's choice between two
fairly conflicting views, even though the court would justifiably
have made a different choice had the matter been before it de
novo."). We treat the factual findings of the Board as conclusive
if supported by substantial evidence on the record. Id. at 477-78;
29 U.S.C. §§ 160(e), (f). And because "the Act has granted the
Board wide discretion in fashioning remedies," N.L.R.B. v. Mount
Desert Island Hosp., 695 F.2d 634, 642 (1st Cir. 1982), we will not
disturb a remedial order "unless it can be shown that the order is
a patent attempt to achieve ends other than those which can fairly
be said to effectuate the policies of the Act." N.L.R.B. v. Otis
Hosp., 545 F.2d 252, 257 (1st Cir. 1976) (quoting Va. Elec. & Power
Co. v. N.L.R.B., 319 U.S. 533, 540 (1943)).
Under the Act, an employer must bargain collectively with
the representative of its employees over decisions affecting
"wages, hours, and other terms and conditions of employment." 29
U.S.C. § 158(d); N.L.R.B. v. Wooster Div. of Borg-Warner Corp., 356
U.S. 342, 349 (1958). An employer violates this duty when he
changes a mandatory term or condition of employment without giving
the employees' representative adequate notice and an opportunity to
bargain. N.L.R.B. v. Katz, 369 U.S. 736, 745-46 (1962); see 29
U.S.C. § 158(d).
Evaluating the scope of mandatory subjects of bargaining,
the Supreme Court identified three categories of management
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decisions in First National Maintenance Corp., 452 U.S. 666.
Decisions that affect the employment relationship only
tangentially, such as advertising and product design, are not
mandatory subjects of bargaining. Id. at 676-77. Decisions
directly affecting the relationship -- wages, working conditions,
and the like -- are mandatory subjects of bargaining. Id. at 677.
This requirement ensures that when an employer aims to reduce labor
costs, employees are presented with the opportunity to negotiate
concessions that reduce overall costs and thus spare jobs.
Fibreboard Paper Prod. Corp. v. N.L.R.B., 379 U.S. 203, 213-14
(1964). Finally, some management decisions have a direct impact on
employment but focus on economic profitability rather than the
employment relationship. First Nat'l Maint. Corp., 452 U.S. at
677. An employer need not bargain over a decision "involving a
change in the scope and direction of the enterprise" and not
"'primarily about conditions of employment, though the effect of
the decision may be necessarily to terminate employment.'" Id.
(quoting Fibreboard Paper Prod. Corp., 379 U.S. at 223 (Stewart,
J., concurring)). To determine the central thrust of decisions in
this third category for mandatory bargaining purposes, the Court
prescribed a balancing analysis -- "bargaining over management
decisions that have a substantial impact on the continued
availability of employment should be required only if the benefit,
for labor-management relations and the collective-bargaining
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process, outweighs the burden placed on the conduct of the
business." Id. at 679. The Court employed the balancing test to
determine that bargaining was not required in the case before it
but expressly noted that its analysis did not preclude different
outcomes in other cases. Id. at 686, n.22.5
In its brief, Pan American contends that the Board did
not comply with this court's remand instruction, see 432 F.3d at
74, requesting clarification on the appropriate analysis for a
multiple motive layoff. Despite Pan American's characterization of
this objection, we find the company is dissatisfied less with the
Board's elucidation than with the result it has reached, namely
that the company is in violation of the Act for failing to
negotiate over the decision to implement layoffs and liable for a
full backpay remedy. We address these findings in turn.
In its most recent decision, the Board explains that an
employer must bargain over a multiple-motive layoff based partially
on labor costs. See Regal Cinemas, Inc. v. N.L.R.B., 317 F.3d 300,
307-08 (D.C. Cir. 2003) (affirming the Board's finding of a Section
8(a)(5) violation where the layoff was motivated by labor costs
rather than technological advances); Winchell Co., 315 N.L.R.B.
5
Indeed, in our remand to the Board, we reflected the
fundamental principle that the Board should develop labor policy,
by observing that First National Maintenance Corp. "seemingly left
open" the issue of whether layoffs prompted by modernization are
mandatory subjects of bargaining. Pan Am. Grain Co., 432 F.3d at
74.
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526, 530, 534-36 (1994), enforced mem., 74 F.3d 1227 (3d Cir. 1995)
(holding that the employer must bargain over a layoff decision
motivated both by a business downturn and business decisions
including the installation of new technology); see also FiveCAP,
Inc., 332 N.L.R.B. 943, 955 (2000). Pan American concedes that it
cannot demonstrate that any particular layoff arose solely due to
its modernization program,6 and we note that there is substantial
evidence, including the testimony of company president Gonzalez,
supporting the Board's finding that the layoffs were motivated in
part by the costs associated with the strike. Because labor costs
were a motivating factor for the layoffs, the Board explained that
the company had a duty to bargain with the Union over the layoffs.
Acknowledging the clarity with which the Board responded to our
remand, we find its position reasonably defensible and affirm.
Pan American argues that the Board "deviat[ed] from an
established standard" and should have applied a modified form of
the burden-shifting test announced in Dubuque Packing Co., 303
N.L.R.B. 386 (1991), enforced sub nom. U.F.C.W. Local 150-A v.
N.L.R.B., 1 F.3d 24 (D.C. Cir. 1993), which was introduced to
determine whether a plant relocation is a mandatory subject of
6
In its brief, Pan American "recognize[s] that the February
27 layoff decision was based on a combination of factors," Brief of
Petitioner at 26, and "acknowledges that the 'economic reasons'
were a different consideration that caused the layoff in February
2002, . . . in addition to a chief factor, the automation project,"
id. at 30.
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bargaining.7 This contention is untimely as Pan American did not
present it to the Board on remand. See 29 U.S.C. § 160(e) ("No
objection that has not been urged before the Board . . . shall be
considered by the court."). Moreover, the Board has explicitly
limited Dubuque to relocation decisions, see, e.g., Furniture
Renters of Am., Inc. v. N.L.R.B., 36 F.3d 1240, 1246-47 (3d Cir.
1994), and Pan American belies its assertion that the Board
deviated from "an established standard" when it suggests that the
Board should have applied a modified form of a test developed for
a different set of facts.
We remanded the Board's order because "we [did] not
understand [its] rationale" and therefore could not "effectively
review it." Pan Am. Grain Co., 432 F.3d at 74 (citation omitted).
In its supplemental decision and order, the Board apprises us of
the analysis it employs when layoffs are motivated by several
reasons, one of which is labor costs, a mandatory subject of
bargaining. Its philosophical approach is not unlike the one it
has adopted for discrimination claims where the employer contends
that a legitimate business decision, rather than antiunion animus,
explains the adverse action taken against the employee. See, e.g.,
7
The Dubuque test places an initial burden on the union to
establish a prima facie case for mandatory bargaining by showing
that the relocation did not include a change of operations. 303
N.L.R.B. at 391. The employer then can rebut by showing that labor
costs were not a factor in the relocation or that even if such
costs were a factor, the union could not have offered concessions
that could change the employer's decision to relocate. Id.
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Wright Line, 251 N.L.R.B. 1083 (1980), enforced, 662 F.2d 899 (1st
Cir. 1981); see also N.L.R.B. v. Transp. Mgmt. Corp., 462 U.S. 393,
403 (1983) (holding that the employer bears the burden of negating
causation in a mixed-motive discrimination case, noting "[i]t is
fair that [the employer] bear the risk that the influence of legal
and illegal motives cannot be separated."). Mindful of our
deferential standard of review, we are content with the Board's
explanation of the analysis employed, finding it reasonably
defensible.
We turn finally to Pan American's assertion that the
Board's remedial order is inappropriate. The company objects to
the remedy based on its view that the layoff was a non-bargainable
business decision,8 a stance we have rejected. We defer to the
Board's knowledge and expertise in fashioning remedies unless the
order patently disregards the policies of the Act. Teamsters Local
Union No. 171 v. N.L.R.B., 863 F.2d 946, 268 (D.C. Cir. 1988). The
customary remedy for an employer's violation of Section 8(a)(5),
reinstatement and full backpay, is "presumptively valid;" it aims
to return the employee to the economic status quo before the
employer's unilateral action. Regal Cinemas, Inc., 317 F.3d at
8
It requests a remedy similar to the one issued in
Transmarine Navigation Corp., 170 N.L.R.B. at 389-90, a case in
which the Ninth Circuit reversed the Board, finding that the
employer was not required to bargain over the layoff decision. In
contrast, we have affirmed the Board's holding that Pan American
violated Sections 8(a)(5) and (1) of the Act.
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315; Geiger Ready-Mix Co. v. N.L.R.B., 87 F.3d 1363, 1371 (D.C.
Cir. 1996). See, e.g., Winchell Co., 315 N.L.R.B. at 536; Compu-
Net Commc'n, Inc., 315 N.L.R.B. 216, 225-26 (1994). We cannot say
that the Board's choice of a conventional remedy for Pan American's
unilateral discharge patently disregards the purposes of the Act.
We consider seriously, however, Pan American's argument
that reinstatement constitutes an undue burden on the company,
noting that it has never increased its workforce since the February
2002 layoffs. "[R]einstatement is an inappropriate remedy if it
would be 'unduly economically burdensome' for the employer." Regal
Cinemas, Inc., 317 F.3d at 315 (quoting Teamsters Local Union No.
171, 863 F.2d at 957-58). The employer bears the burden of showing
"that the Board's [remedial] order would require a substantial
outlay of new capital or otherwise cause undue financial hardship."
Teamsters Local Union No. 171, 863 F.2d at 958. While we enforce
the Board's remedial order, we draw attention to its assurances
both in its brief, Brief of Respondent at 31, n.17, and at oral
argument that Pan American can provide evidence during the Board's
compliance proceedings to show that reinstatement of the fifteen
employees is unduly burdensome because the company no longer
requires those positions for its operation. See Compu-Net Commc'n,
Inc., 315 N.L.R.B. at 216, n.3 ("[T]he Respondents may introduce
previously unavailable evidence, if any, at the compliance stage of
this proceeding to demonstrate that the reinstitution of those
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operations is unduly burdensome.") (citing Lear Siegler, Inc., 295
N.L.R.B. 857 (1989)); E.I. Du Pont Nemours & Co. v. N.L.R.B., 489
F.3d 1310, 1317 (D.C. Cir. 2007) (discussing the appropriate
procedure for developing an objection to the remedial order); West
Penn Power Co. v. N.L.R.B., 394 F.3d 233, 246 (4th Cir. 2005)
(same).
III.
For the foregoing reasons, Pan American's petition for
review is denied and the Board's cross-application for enforcement
is granted.
So ordered.
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