Naperville Ready Mix, Inc. v. National Labor Relations Board

In the
United States Court of Appeals
For the Seventh Circuit

Nos. 99-3634, 99-3994

Naperville Ready Mix, Inc., et al.,

Petitioners/Cross-Respondents,

v.

National Labor Relations Board,

Respondent/Cross-Petitioner,

and

Teamsters Local 673,

Intervening Respondent/Cross-Petitioner.

On Petition for Review and Cross-Application
for Enforcement of an Order
of the National Labor Relations Board
Nos. 13-CA-31031, et al.

Argued September 28, 2000--Decided March 6, 2001

Before Manion, Rovner, and Diane P. Wood, Circuit
Judges.

Diane P. Wood, Circuit Judge. Richard Wehrli
owned several companies in Naperville, Illinois,
which were involved in the concrete and trucking
businesses. This case arose when one of the
companies, Naperville Ready Mix, Inc. (NRM),
decided to change the way that it would deliver
concrete. The National Labor Relations Board (the
Board) concluded that NRM and several other of
Wehrli’s companies were a single employer for
purposes of the labor laws, and it further found
that the company had violated various sections of
the National Labor Relations Act (the Act)
through its efforts to transfer bargaining unit
delivery work from employees to alleged
independent owner-drivers. NRM and its
affiliates, T&W Trucking, Inc. (T&W), and Wehrli
Equipment Co. (WEC), have asked us to set aside
the Board’s order requiring reinstatement of
certain drivers and restoration of the bargaining
unit work; the Board requests enforcement of its
order. We conclude that the Board’s order is
supported by substantial evidence and the law,
and we thus conclude that it is entitled to
enforcement.
I

Wehrli incorporated NRM in 1960, with himself
and his wife Judith Wehrli as the only
stockholders. Wehrli served as NRM’s president,
and as of 1992 the company’s board consisted of
Richard and Judith Wehrli, Richard’s brother-in-
law Jerome Doll and the Wehrlis’ son Robert. In
1978, Wehrli incorporated WEC to provide repair
services for NRM dump trucks and other trucks at
NRM’s facility on High Grove Street in
Naperville. Wehrli is the sole shareholder of
WEC; he served on its board of directors through
1992, when he was replaced by his son Scott. In
1987, Wehrli and a supervisor at NRM, Robert
Tilly, added T&W trucking to the family of
companies. Through 1992, they were T&W’s sole
directors and shareholders. At the time of the
events relevant to this case, T&W was providing
hauling services for only two companies: NRM and
one other.

Ready-mix truck drivers at NRM were covered by
a collective bargaining agreement that Wehrli had
originally negotiated with Teamsters Local 673
(the Union) in 1986. On April 21, 1992, NRM and
the Union began negotiating a successor agreement
for the one that was due to expire nine days
later, on April 30. The Union’s principal
representative was its Secretary-Treasurer, Tom
Custer, while Wehrli spoke for NRM. At the
initial meeting, the Union presented a
comprehensive written proposal seeking increased
wages and pension benefits as well as improved
job protection standards for the drivers. NRM
rejected the proposal and countered with a one-
year roll-over offer, with a few revisions to the
health and pension plan provisions. Wehrli argued
that concessions from the Union were necessary
because of increased competition and declining
profit margins in the ready-mix business. In the
absence of concessions, he warned, he would
either have to suspend trucking operations until
the market improved or get out of the hauling
business altogether.

When the parties met again on May 7, the Union
tried to take the contract items one-by-one. NRM
was not receptive to this tactic; Wehrli saw it
as a ploy by the Union to win benefits comparable
to those it had secured with the Northern
Illinois Ready Mix Association (NIRMA), a local
multi-employer bargaining group. Wehrli claimed
that NRM was losing money on the delivery portion
of its business, and he announced that he wanted
to sell NRM’s trucks and operate with owner-
operator subcontractors. Custer responded by
saying that if NRM were to make such a move it
would have to become a party to the NIRMA
agreement (as other similarly situated companies
had done), which gave owner-operators the
protections of union membership. Custer also
commented that the Union was there to negotiate
a contract, not to help NRM sell its trucks.

On May 12, Wehrli sent Custer the following
letter:

I have decided to go out of the trucking
business and am offering to sell my trucks to my
present drivers first, and then any leftover
trucks will be offered to outsiders. I intend to
use individual contractors for all my trucking
needs. If you want any discussion with me in this
regard feel free to call.

Custer saw this letter as a part of the overall
bargaining give-and-take, as it reflected the
position Wehrli had taken at the two previous
bargaining sessions. He therefore saw no need to,
and did not, specifically reply to the letter.

The parties held another bargaining meeting on
May 14, at which they made some progress. The
Union agreed to remove certain demands, and NRM
agreed to modify the language in several contract
clauses. Wehrli continued to assert that he
intended to sell the trucks. To this end, he
introduced a proposal to delete Article 24 from
the contract. Article 24 provided that certain
owner-operator subcontractors would be treated
like bargaining unit employees for purposes of
wages, union security, and benefits. Wehrli
wanted it deleted because it would have defeated
much of the point of his plan to sell NRM’s
ready-mix trucks and to rely on subcontract
haulers. He made it clear that under his
proposal, the new subcontract haulers would not
be members of the NRM employee bargaining unit.
On May 15, he reduced his proposal to writing.

Without waiting for the Union’s response, Wehrli
proceeded to hold meetings with NRM’s drivers on
May 20 and May 27. The Union had no notice of
these meetings and did not approve them. At the
meetings, Wehrli discussed the financial
difficulties he faced and informed the drivers of
his intention to sell the trucks. He promised
that he would make the trucks available for
purchase by current drivers and that he would
assist them with the logistics of becoming owner
operators and with financing the purchase of the
trucks. Wehrli also stated as a fait accompli
that if the drivers became subcontractors they
would no longer be covered under the Union’s
contract with NRM. Finally, he informed the
drivers that as trucks were sold to current NRM
and outside drivers, current drivers who had not
purchased trucks would be laid off in reverse
order of seniority.

After Wehrli’s May 20 meeting, Custer met with
the drivers to discuss the status of the
negotiations. The union members voted to reject
NRM’s May 15 proposal, and they authorized the
Union to call a strike. Custer explained that a
strike was premature, because the parties were
still negotiating.

In the meantime, Wehrli was proceeding
unilaterally with his sales plans. By June 1,
1992, he had found two buyers for the trucks--his
son Robert and a current driver, Richard Downs.
He also placed advertisements in local trade
papers, which yielded the names of ten
prospective outside buyers. By the last week in
June, Wehrli had handshake agreements with five
individuals to sell nine trucks. Between June 28
and 30, he transferred title in those trucks to
the new owners.

The financial terms that Wehrli set for the
truck sales were favorable for the purchasers,
but in return they gave up almost all control
over the use of the trucks. No down payment was
necessary, and Wehrli supplied the necessary
financing. Each new owner-operator was to be paid
$14 per cubic yard hauled, out of which $1 would
go to pay principal on the debt. Wehrli retained
a security interest in the trucks, under which he
was entitled to find a buyer in default if NRM
had a good faith belief that the driver was
failing to perform the terms of the sales
contract. Most importantly, there was a "first
priority" provision that required the buyers to
give first priority to the hauling needs of NRM
so long as NRM provided reasonable notice of its
intent to use the subcontractor; this requirement
continued until the principal on the truck was
paid off. The sales contract forbade the buyers
from working for NRM’s competitors within a
fifteen mile radius of NRM’s plant. The new
owner-operators were also entitled to purchase
subsidized fuel at the NRM facility and to call
on NRM and WEC mechanics to perform all truck
repairs. Finally, owner-operators were encouraged
to store their vehicles at the NRM facility free
of charge.

On July 1, five owner-operator subcontractors
began hauling for NRM under these terms. Except
for the nominal change in ownership of the trucks
and the fact that the new drivers were not part
of the bargaining unit, there were no meaningful
changes in the day-to-day business of hauling at
NRM. The owner-operators all hauled exclusively
for NRM; they received their hauling assignments
from the same individuals and according to
essentially the same procedures as the unit
employee drivers had; they attended the same
monthly safety meetings that NRM had always held;
and they refueled, repaired, and stored their
trucks at the High Grove Street facility.

Meanwhile, throughout June and July, the
collective bargaining negotiations with the Union
continued. There was at least one meeting in
early June, and on June 15 the parties met with
a federal mediator. The Union modified its offer
at that meeting, as did NRM. Wehrli continued to
insist on a one-year roll-over and the deletion
of Article 24, but he proposed wage and benefit
adjustments modeled after the Union’s recently
ratified contract with NIRMA. Union members
rejected NRM’s offer and two days later they went
on strike. NRM and the Union held brief meetings
June 21 and 22. At the June 22 meeting, Custer
asked Wehrli how the strike might be resolved,
and Wehrli responded that it was too late to
resolve the strike because the trucks had already
been sold. Custer requested information
documenting the sales, but he did not receive it.
Wehrli followed up the June 22 meeting with a
letter to Custer declaring that the parties had
reached impasse on the proposal to sell the
trucks and subcontract NRM’s hauling business.
Custer rejected that claim, and the parties met
again on June 25. The Union offered another
modified contract proposal. NRM rejected it and
instead responded on the same day with a faxed
"Final Contract Proposal."

On July 1, non-unit subcontractors began
delivering NRM’s ready mix, and the parties held
another negotiating meeting. The Union made
additional concessions, and Custer told Wehrli
that it would be willing to consider appropriate
modifications of Article 24. At this meeting,
Custer also repeated his request for information
regarding NRM’s sale of its trucks. The next day,
the Union’s counsel sent a letter formally
requesting information regarding terms and
conditions of the sale of the trucks. NRM
responded with a letter stating that it did not
believe that the information was relevant to the
ongoing collective bargaining negotiations and
that the Union had to demonstrate the relevance
of each document it sought access to before NRM
would disclose it. The Union did not respond.

The parties met again in late July and in early
August. At the August 7 meeting, the Union made
a series of new proposals which NRM rejected.
Finally, on August 18, NRM informed the Union by
letter that it intended to sell all its remaining
trucks and proposed the elimination of an
additional term in the collective bargaining
agreement. In the letter, NRM reminded the Union
that it considered the parties to be "at an
impasse on the issue of [NRM’s] plan to
subcontract all delivery work," but assured the
Union that NRM continued to be willing to
negotiate other aspects of the collective
bargaining agreement.

The strike that began June 17 continued
throughout this period of negotiation. Wehrli,
who had already encouraged unit workers to take
part in his plan to shift unit hauling work to
subcontractors at the employee meetings in May,
continued to talk to the striking workers about
it on the picket line. Wehrli informed the
strikers that he was selling his trucks and that
if they wanted to continue hauling for NRM they
would have to become owner-operators. He
explained that once the trucks were sold there
would be no more work for them. Wehrli also told
striking workers that they could avoid Union
sanctions for crossing the picket line by signing
documents making them "financial core" members.
NRM subsequently included instructions on how to
become a financial core member and a form for
doing so in paychecks distributed to the
strikers.

Despite these efforts, most of the NRM drivers
chose to remain loyal to the Union and continue
the strike. In February of 1993, Custer sent NRM
a letter stating that twenty-four named strikers
wanted to return to work unconditionally. NRM
refused to reinstate them.

The Union filed a number of charges with the
National Labor Relations Board during the course
of these events. Based on these charges, the
General Counsel ultimately issued a consolidated
complaint against NRM and its affiliated
companies. The complaint began by asserting that
NRM, T&W, and WEC comprised a single employer, as
did NRM and six other corporate entities
(representing the "new" independent trucking
companies that took ownership of some of the
vehicles). Substantively, it claimed that NRM
(meaning for our purposes the whole group)
violated sections 8(a)(5), (3), and (1) of the
Act in several respects: by interfering with the
employees’ union activities through interrogation
and threats (section 8(a)(1)); by direct dealing
with represented employees, unilaterally
transferring bargaining unit work to non-
bargaining unit employees, and refusing to
provide information to the Union (sections
8(a)(5) and (1)); and by discharging unit
employees whose work had been reassigned and
refusing to reinstate unfair labor practice
strikers upon their unconditional offer to return
to work (sections 8(a)(3) and (1)).

The administrative law judge dismissed the
charges in their entirety, but the Board
reversed. 329 NLRB No. 19. It upheld the charges
and ordered the company to cease and desist from
the unfair labor practices it had found, to
restore the delivery work to the unit employees,
and to reinstate both those who lost their jobs
as a result of the unilateral transfer of the
delivery work to the owner-drivers and those who
were not reinstated after the unfair labor
practice strike.

II

In reviewing the Board’s decision, we give
substantial deference to both its findings of
fact and its interpretations of the Act. Factual
determinations must be upheld if they are
supported by substantial evidence on the record.
29 U.S.C. sec. 160(e). See NLRB v. Roll & Hold
Warehouse & Dist. Corp., 162 F.3d 513, 517 (7th
Cir. 1998); U.S. Marine Corp. v. NLRB, 944 F.2d
1305, 1313-14 (7th Cir. 1991) (en banc). With
respect to questions of law, we defer to the
Board’s interpretation of the statutes it is
charged with administering unless its view is
arbitrary or capricious. See NLRB v. GranCare,
Inc., 170 F.3d 662, 666 (7th Cir. 1999) (en
banc).

A. Single Employer Status

NRM first challenges the Board’s conclusion that
NRM, WEC, and T&W are a single employer for
purposes of liability under the Act. We must
decide first whether the legal standard the Board
used to make this determination was a permissible
one. If it is, then the single employer finding
is a factual determination subject only to
substantial evidence review. NLRB v. Emsing’s
Supermarket, Inc., 872 F.2d 1279, 1289 (7th Cir.
1989). NRM’s attack is against both the legal
standard the Board used and its factual
conclusions, but we find no reversible error in
either./1

The Board acts within its discretion when it
treats as a single employer firms that operate as
an integrated enterprise and "exert[ ]
significant control over" the employees in
question. G. Heileman Brewing Co. v. NLRB, 879
F.2d 1526, 1530 (7th Cir. 1989). In this case,
the Board used its standard four factor test to
determine whether the companies were sufficiently
integrated to constitute a single employer: (1)
common management; (2) centralized control of
labor relations; (3) interrelation of operations;
and, (4) common ownership or financial control.
See Radio and Television Broadcast Technicians
Local Union 1264 v. Broadcast Service of Mobile,
Inc., 380 U.S. 255, 256 (1965). NRM concedes that
this was the proper legal approach in general,
but it argues that the Board erred by failing to
give primacy to the second factor, centralized
control of labor relations. The statute, however,
does not impose such an inflexible weighting
requirement on the Board, nor has the Board
adopted such a rule for itself. At most, the
Board has commented that centralized control of
labor relations is a particularly important
factor, see, e.g., Fedco Freightliners, Inc., 273
NLRB 399 (1984), but it has also consistently
said that this is a contextual inquiry and no one
factor is determinative. Id. at 399; Bistritzky
v. Service Employees Int. Union, Local 32E, AFL-
CIO, 323 NLRB 524 (1997); NLRB v. Carson Cable
TV, 795 F.2d 879, 881 (9th Cir. 1986). The listed
factors merely help to guide the Board as it
assesses "whether there exists overall control of
the critical matters at the policy level."
Emsing’s Supermarket, Inc., 284 NLRB No. 41 (June
18, 1987), enforced 872 F.2d. 1279 (7th Cir.
1989).

On the facts, we find that the Board’s single
employer finding is adequately supported by
substantial evidence. First, as the Board noted,
there is evidence of common ownership. Wehrli and
his wife owned NRM; Wehrli was the sole owner of
WEC; and Wehrli owned 50% of T&W. There is also
substantial evidence of shared management. Wehrli
was an officer in each of the companies; he was
president of NRM and WEC and he was secretary,
and one of only two directors, of T&W. The other
director of T&W, Bob Tilly, was a maintenance
supervisor at NRM and assumed management
responsibilities at WEC on or shortly before July
1, 1992. As the Board pointed out, the only other
individuals involved in the management of these
companies were Wehrli’s wife, his son Scott, and
Jerry Doll. Wehrli also testified before the ALJ
that in the first four months of 1992 it was his
daily practice to "come in and spend time with
each of the managers and officers and whatever
titles they had of the various companies and we
would go over major problems or issues that they
had that they were working on." Finally, there
was evidence of operational integration among the
three companies, including a shared location,
informal sharing of labor among the companies,
and the fact that T&W and WEC served primarily,
if not exclusively, the hauling and maintenance
needs of NRM. Under these circumstances, the
Board was entitled to conclude that the companies
shared common ownership and management.

Indeed, the only factor where the record does
not strongly support the Board’s conclusion is
the one NRM has targeted: whether there was
centralized control of labor relations.
Nonetheless, there is significant evidence that
such centralized control existed, and even if it
did not extend to all three companies, the
absence of one factor is not fatal to the Board’s
conclusion. There is no dispute that Wehrli
controlled labor relations for NRM. He was
president of the company and represented it
during negotiations with the Union. With respect
to T&W, Wehrli was one of only two directors and
on at least one occasion it was Wehrli rather
than Tilly who met with the T&W workers to inform
them of the consequences of not continuing to
work during the NRM drivers’ strike. As the Board
concedes, there is little direct evidence that
Wehrli controlled labor relations at WEC, but the
record permits the inference that he did so. He
was president of the company, regularly involved
himself in the management of WEC, and exercised
substantial control over major budgetary
decisions. The record also suggests that it was
Wehrli who directed the use of WEC and NRM
employees in constructing a new ready-mix batch
plant for NRM at the High Grove Street facility.

Taken as a whole, substantial evidence indicates
that NRM, WEC, and T&W were highly integrated and
that Wehrli, assisted by a small group of
primarily family members, exercised substantial
control over all aspects of the companies’
affairs. We therefore find that the Board’s
decision to treat them as a single employer is
entitled to enforcement.

B. Failure to Bargain

The Board’s decision in this case rested on one
fundamental finding: that NRM’s sale of its
trucks was part of a plan to shift unit work to
non-bargaining unit subcontractors, and that this
plan was a mandatory subject of bargaining. NRM
has urged all along (successfully to the ALJ)
that it made an entrepreneurial decision to go
out of the trucking business and that it
therefore had no obligation to bargain with the
Union over this plan. The Board rejected this
contention, finding that NRM had not changed the
basic nature of its operations. Instead,
motivated by the desire to reduce labor costs,
"NRM merely replaced the employees driving trucks
with other employees under the ’owner-operator’
rubric (or in some cases the same employees under
the new title), maintaining essentially the same
control over them that it had always enjoyed."
329 NLRB No. 19 at 8. As a result, the Board
concluded, NRM’s plan amounted to subcontracting
unit work, and under section 8(a)(5) of the Act
NRM was required to bargain to impasse prior to
implementing it.
 Before addressing the Board’s decision on the
merits, it is important to explain how the truck
sales should, and should not, be assessed. NRM
has devoted considerable energy in its appellate
briefs to explaining why the sales were not "sham
transactions," as that term is used in alter ego
or single employer cases. See, e.g., NLRB v. Dane
County Dairy, 795 F.2d 1313, 1322 (7th Cir.
1986). But, as we read the Board’s opinion, it
was not invoking that doctrine (despite its
somewhat careless use of the phrase "sham
transaction" here and there). It was not the
Board’s contention that NRM continued to own the
trucks at issue; there is no dispute that title
was legally transferred. The Board was saying
only that the transactions were phony, or "sham,"
insofar as their employment consequences were
concerned. NRM sold the trucks, but it did so as
part of a plan that allowed it to remain in the
business of delivering ready-mix, albeit using
non-union subcontractors instead of bargaining
unit employees. But that was exactly the Board’s
problem: a company cannot, consistent with the
labor laws, shift unit work to subcontractors in
order to save on labor costs without first
bargaining in good faith to impasse.

The Board’s conclusion that NRM’s plan to shift
its hauling business away from the bargaining
unit and to subcontractors was a mandatory
subject of bargaining is both based on a
reasonable interpretation of the Act and
supported by substantial evidence in the record.
Section 8(a)(5) of the Act requires an employer
to "bargain collectively with the representatives
of his employees." The Act defines collective
bargaining as "the performance of the mutual
obligation of the employer and the representative
of the employees to . . . confer in good faith
with respect to wages, hours and other terms and
conditions of employment." 29 U.S.C. sec.158(d).
The Board appropriately relied on Fibreboard
Paper Products Corp. v. NLRB, 379 U.S. 203
(1964), to support its conclusion that NRM’s
transfer of its hauling work to non-union
subcontractors was a change in the terms and
conditions of employment over which NRM was
obligated to bargain. In Fibreboard, the Supreme
Court found that a company’s decision to contract
out maintenance work in order to save on labor
costs amounted to "replac[ing] existing employees
with those of an independent contractor to do the
same work under similar conditions of
employment." 379 U.S. at 213. In such a
situation, it held, the employer violates the Act
if it does not first bargain to impasse with the
union. See also First National Maintenance Corp.
v. NLRB, 452 U.S. 666, 679-80 (1981). After
Fibreboard and First National Maintenance, when
an employer chooses to subcontract unit work in
order to save on labor costs, that choice
typically does not involve a change in the scope
and direction of the enterprise and thus is not
a core entrepreneurial decision beyond the scope
of the Act’s bargaining obligation. See Rock-Tenn
Co. v. NLRB, 101 F.3d 1441, 1446 (D.C. Cir. 1997)
(concluding bargaining was mandatory because
shift of unit work to subcontract hauling company
to save on labor costs "is a prototype Fibreboard
case").

In this case, the Board properly found that
NRM’s sale of its trucks was simply an element of
its plan to switch unit work to lower-cost
subcontractors and that under Fibreboard this
plan could not be implemented until impasse had
been reached. The record amply supports this
characterization. Before and after July 1, 1992,
NRM’s business involved the delivery of ready-mix
concrete to its customers. Neither the scope nor
the manner of this aspect of its business changed
in any way after July 1. To the contrary, Wehrli
ensured that things would stay functionally the
same by carefully structuring the sale of NRM’s
trucks to give NRM nearly complete control over
how the trucks were used. After July 1, the same
trucks were still hauling exclusively NRM’s
product; the drivers still received their orders
from the same dispatcher and in accordance with
essentially the same procedures previously used;
and the trucks were still refueled, repaired, and
stored at the High Grove Street site. The only
identifiable difference in how NRM hauled ready-
mix concrete after July 1 was that the drivers of
the trucks were no longer covered by the Union’s
collective bargaining agreement.

There is also substantial evidence in the
record that NRM’s motivation for switching to
subcontract haulers was to save on labor costs.
Wehrli himself admitted that this was what he was
doing, and his statements at the negotiating
meetings leave no doubt about the matter.
Wehrli’s own testimony is sufficient to support
the conclusion that the plan to move to an owner-
operator system was motivated by a desire to
reduce labor costs. This is precisely the kind of
concern that Fibreboard and First National
Maintenance instruct is particularly amenable to
resolution through collective bargaining. 379
U.S. at 214; 452 U.S. at 669.

We agree with the Board that this case is
governed by Fibreboard. At oral argument NRM
argued strenuously that it was entitled to sell
its trucks, but that is not the point. What NRM
was not entitled to do under these circumstances
was to shift unit work to non-union
subcontractors without first bargaining to
impasse with the Union. Of course, had NRM
negotiated to impasse before transferring the
work, there would have been no violation of the
Act. We turn now to the question of whether it
did so, or, if not, whether the Union waived its
right to bargain over the issue.

C. Negotiating to Impasse

An employer violates sections 8(a)(1) and (5)
of the Act when it unilaterally changes a
condition of employment that is a mandatory
subject of bargaining before bargaining has
reached an impasse. NLRB v. Katz, 369 U.S. 736,
743 (1962); Lapham-Hickey Steel Corp., 904 F.2d
1180, 1185 (7th Cir. 1990). Because an employer
is only required to bargain in good faith and may
ultimately refuse to amend its proposals, once
impasse has been reached the employer may
implement its original proposals without
violating the Act. Duffy Tool & Stamping, L.L.C.
v. NLRB, 233 F.3d 995, 996 (7th Cir. 2000). In
the context of ongoing collective bargaining
negotiations, however, we have recently held that
the parties are required to reach an overall
impasse before an employer can unilaterally
implement individual proposals made during the
course of collective bargaining. Id. at 999; see
also Visiting Nurse Services of Western
Massachusetts, Inc. v. NLRB, 177 F.3d 52, 58 (1st
Cir. 1999) (same).

NRM’s contention that the parties had reached
impasse on the subcontracting issue is precisely
the kind of partial impasse argument foreclosed
by Duffy. Partial impasse does not justify
unilateral implementation of the contested item,
and it is clear both that nothing approaching
total deadlock had occurred between the Union and
NRM at the time NRM unilaterally sold the trucks,
and that NRM’s decision to sell the trucks was
not part of a larger plan to go out of business.
As our earlier review of the course of events
shows, collective bargaining negotiations were
ongoing until at least August 7 or 18, long after
NRM implemented its truck sale plan.

NRM contends in the alternative that it was not
required to negotiate to impasse because the
Union had waived its right to bargain over the
issue of subcontracting. Duffy recognized that
there could be exceptions to the overall impasse
rule in the event that the employer could
demonstrate that the union waived its right to
bargain over a particular proposal or that the
company would suffer severe economic consequences
from a delay in implementation. 233 F.3d at 997.

To establish waiver, an employer must prove
that the union’s waiver of its statutorily
protected right was "clearly and unmistakably
articulated." Beverly California Corp. v. NLRB,
227 F.3d 817, 838 (7th Cir. 2000). Alternatively,
a union can relinquish its right to bargain if it
"insists on continually avoiding or delaying
bargaining." Serramonte Oldsmobile, Inc. v. NLRB,
86 F.3d 227, 235 (D.C. Cir. 1996). NRM does not
assert that the Union engaged in any such
dilatory conduct; it must therefore show that the
Union unmistakably waived its right to bargain
over NRM’s proposal to subcontract hauling
services. NRM finds such a waiver in the Union’s
repeated refusal to accept its plan to shift
hauling work to non-union subcontractors and its
proposed modifications of Article 24. The Board
properly rejected this argument. NRM’s waiver
theory is simply a restatement of its single-
issue impasse theory using different terminology.
In the context of collective bargaining
negotiations, the Union’s mere refusal to budge
on a particular issue cannot constitute a waiver.
Indeed, the Union expressed its willingness to
discuss changes to Article 24 as late as the July
1 meeting, which further weakens NRM’s argument.
At no time did the Union refuse to negotiate or
fail to negotiate in good faith over the terms of
the successor contract. The record lends ample
support to the Board’s conclusion that while the
Union was opposed to the truck-selling plan, "it
expressed willingness to try to find ways by
which NRM’s economic concerns could be met" and
that "[t]he Union was thus responsive and
persistent rather than dilatory and evasive in
the negotiations." 329 NLRB No. 19 at 9. Under
these circumstances, there was no waiver.

NRM finally claims that the strike entitled it
to implement its shift to a system of subcontract
haulers, but here it is confusing apples and
oranges. It is true that when workers strike, an
employer may temporarily subcontract unit work in
order "to enable the employer to continue
operating in an emergency situation thrust upon
it by a strike." American Cyanamid Co. v. NLRB,
592 F.2d 356, 360 (7th Cir. 1979). But the mere
fact that employees go on strike does not relieve
the employer of the duty to bargain to impasse,
and thus it does not permit an employer
permanently to subcontract out unit work in the
absence of impasse. Id. All of the evidence
supports the Board’s conclusion that NRM’s
subcontracting was not a temporary response to
circumstances created by the strike, but rather
the implementation of a carefully formulated plan
for a permanent shift of unit work away from
employees and over to subcontractors.

D. Failure to Provide Relevant Information
 Section 8(a)(5) of the Act imposes on the
employer a duty to bargain in good faith. This
duty encompasses an obligation on the employer to
disclose information relevant to the bargaining
process. NLRB v. Truitt Mfg. Inc., 351 U.S. 149,
152-53 (1956). Although there are exceptions, in
general an employer violates section 8(a)(5) by
failing to disclose relevant information upon
request. NLRB v. George Koch Sons, Inc., 950 F.2d
1324, 1330-31 (7th Cir. 1991). Whether the
requested information was relevant is the
threshold question and the only one in dispute in
our case. The information the Union wanted was
about NRM’s proposal to subcontract unit work.
The burden was on the Union to demonstrate the
relevance of the requested information under the
very liberal relevancy standard applied in these
situations. See NLRB v. Acme Indus. Co., 385 U.S.
432, 437 n. 6 (1967) (applying a discovery-type
relevancy standard).

The Board concluded that NRM violated sections
8(a)(5) and (1) of the Act by failing to give the
Union the requested information about the sale of
its trucks. At the July 1, 1992, negotiating
session, Wehrli indicated to Custer that it was
too late to negotiate a contract with NRM that
covered the NRM drivers, because the trucks they
had been driving had already been sold. Custer
testified that he promptly asked Wehrli to
provide him with documentation of the sales. On
July 10, counsel for the Union sent a letter
again requesting information regarding the nature
and terms of the truck sales. Rather than
providing the requested information, NRM’s
counsel responded with a letter disputing the
Union’s right to have access to the information
and demanding that the Union explain how "each of
the documents requested is reasonably calculated
to elicit information which the Union may need to
properly represent its members and a citation to
case authority which supports the request." The
Union chose not to respond and instead filed an
unfair labor practices charge.

On these facts, there is again ample evidence
to support the Board’s conclusion that NRM
violated the Act. The Union’s request for
information arose directly out of a subject the
parties were discussing in connection with their
collective bargaining. Under the Court’s
reasoning in Truitt, 352 U.S. at 152-53, the
Union was entitled to know exactly what
circumstances it faced. If NRM’s truck sale claim
was "important enough to present in the give and
take of bargaining," then the Union was entitled
to "some sort of proof of its accuracy." Id. NRM
was aware of the relevance of this information to
the Union’s ability to represent unit members,
and NRM’s subsequent effort to deny its relevancy
is precisely the kind of bad faith negotiating
tactic that is prohibited by section 8(a)(5) of
the Act.

E. Direct Dealings, Negotiations, and Threats

Implicit in the obligation to bargain in good
faith "is the principle that the employer is not
to go behind the union’s back and negotiate with
individual workers, nor otherwise to undermine
the union’s status as exclusive bargaining
representative." Szabo v. U.S. Marine Corp., 819
F.2d 714, 718 (7th Cir. 1987); see also Medo
Photo Supply Corp. v. NLRB, 321 U.S. 678, 683-85
(1944). This prohibition forecloses individual
negotiations with unit employees, in most cases
even if collective bargaining negotiations have
reached an impasse. McNealy v. Caterpillar, Inc.,
139 F.3d 1113, 1118 (7th Cir. 1997). Furthermore,
the duty to refrain from undermining the union’s
status as exclusive bargaining agent precludes
promises of benefits or threats of sanctions to
union members that have the effect of reducing
the employees’ support for their union. Beverly
California Corp., 227 F.3d at 817, 832-33. The
Board concluded that NRM repeatedly engaged in
these forms of prohibited activity.

We see no need to lengthen this opinion with
yet another rehearsal of the facts. Wehrli’s
meetings with the drivers while negotiations were
still underway and his warnings that those who
did not buy a truck would be laid off support the
Board’s findings. NRM attempts to cast these
meetings as nothing more than occasions during
which Wehrli was providing accurate information
to employees about a "business opportunity." In
the context of the ongoing collective bargaining
negotiations over the very proposal at issue,
however, we find the Board’s characterization
more accurate: "[T]he meetings were efforts to
enlist the employees in the sham transactions by
which [NRM] would carry on the ready mix delivery
operations without the obligations or costs of a
union contract." 329 NLRB No. 19 at 11. These
meetings amounted to direct dealing in violation
of section 8(a)(5) of the Act.

With respect to the section 8(a)(1) violation
that the Board found in connection with Wehrli’s
statements that the employees would lose their
jobs if they did not accept the terms of NRM’s
subcontracting plan and that subcontractors would
not be members of the collective bargaining unit,
the record again supports the Board. We find no
merit in NRM’s procedural objection to the effect
that the charges complaining of the alleged
threats made at the meetings and to individual
NRM employees were not timely filed. The threat
charges arose from the General Counsel’s
investigation into precisely the situation about
which the Union had complained in its charge
filed June 9, 1992. The threat charges properly
related back to the June 9, 1992 complaint, and
the Board properly considered them.

NRM’s argument on the merits that the employees
could not have seen these statements as
"threats," because Wehrli was simply inviting the
employees to negotiate new agreements as owner-
operators, is meritless as well. To constitute a
prohibited threat under the Act, a statement must
only "reasonably tend[ ] to interfere with,
restrain, or coerce employees in the free
exercise of their protected rights." NLRB v. Q-1
Motor Express, Inc., 25 F.3d 473, 477 (7th Cir.
1994). The relevant perspective is that of the
employees. Wehrli made it clear to unit workers
at the May meetings and on the picket line that
their only choice was between becoming
subcontract owner-operators outside the current
bargaining unit and losing their jobs. NRM
concedes that this happened. The Board was
entitled to conclude that the employees with whom
Wehrli talked would have felt coerced into
abandoning the Union in the midst of the Union’s
ongoing collective bargaining negotiations with
NRM. The Board’s conclusion that NRM violated
section 8(a)(1) is well within the bounds that
this record would support.

F. Wrongful Discharge and Failure to Reinstate

The Board found that NRM violated sections
8(a)(5) and 8(a)(3) of the Act by transferring
unit work to non-unit personnel in order to
eliminate the Union as the unit bargaining
representative. The Board also found that NRM
violated section 8(a)(3) of the Act by failing to
reinstate employees who made an unconditional
offer to return. Again, we find the Board’s
conclusions to be supported by substantial
evidence in the record. The charges were
sufficiently related to the initial complaints to
be properly before the Board, and our approval of
the Board’s section 8(a)(5) analysis with respect
to the transfer of unit work to non-unit
subcontractors is equally applicable here.

Section 8(a)(3) of the Act prohibits
"discrimination in regard to hire or tenure of
employment or any term or condition of employment
to encourage or discourage membership in any
labor organization." The Board reasoned that NRM
violated section 8(a)(3) when it forced union
employees to choose between abandoning their
union to become owner-operator subcontractors and
having no job at all. In effect, the Board viewed
NRM’s statements as a promise that there would
only be work for those who renounced their union
membership. The Board properly concluded that
imposing this impermissible choice upon the unit
workers was a violation of the Act. See Canteen
Corp. v. NLRB, 103 F.3d 1355, 1365-66 (7th Cir.
1997). In this case, those NRM drivers who
refused to abandon the Union in order to
participate in NRM’s unilaterally implemented
switch to subcontract hauling were constructively
discharged as NRM sold its trucks and replaced
bargaining unit workers with owner-operator
subcontractors. The fact that the unit employees
were on strike at the time is of no consequence.
We thus affirm the Board’s conclusion that NRM
violated section 8(a)(3) of the Act by offering
only those who would abandon the bargaining unit
continued employment.

Finally, the Board found that NRM violated
section 8(a)(3) of the Act by refusing to
reinstate striking workers who made an
unconditional offer to return to work. It is
settled that "unfair labor practice strikers are
entitled to reinstatement upon making an
unconditional offer to return to work."
Lapham-Hickey Steel Corp., 904 F.2d at 1188;
accord Richmond Recording Corp. v. NLRB, 836 F.2d
289, 292 (7th Cir. 1987). The Board found, and we
agree, that this was an unfair labor practices
strike,/2 and there is substantial evidence in
the record to support the Board’s conclusion that
an unconditional offer was made and that NRM did
not reinstate the workers. Given the absence of
any contrary evidence in the record, this
evidence is sufficient to support the Board’s
finding that NRM failed to reinstate the striking
workers in violation of the Act.

III

Last, NRM argues that the Board’s order
requiring restoration of NRM’s trucking
operations and reinstatement of employee truck
drivers should not be enforced because it is
unreasonable and imposes an "undue or unfair
burden." NRM concedes, however, that it did not
make this argument before the Board. The Act very
clearly states that an objection "not urged
before the Board . . . shall [not] be considered
by the court, unless the failure or neglect to
urge such objections shall be excused because of
extraordinary circumstances." 29 U.S.C.
sec.160(e). NRM does not point to any
extraordinary circumstances justifying its
failure to urge this objection before the Board
and thus our hands are tied. Relying on our
opinion in NLRB v. Thill, Inc., 980 F.2d 1137
(7th Cir. 1992), NRM suggests that because
enforcement of the Board’s order is an equitable
remedy we should use our equitable powers to
decline to enforce the injunction. Even if this
were an avenue open to us (which we doubt, given
our duty to defer to the Board), we would decline
to take it in this case, notwithstanding the
Board’s unfortunate delay in issuing its opinion.
First, this is a point NRM saved for its reply
brief, and it is therefore not properly before
us. Second, as the Supreme Court held in NLRB v.
Ironworkers, 466 U.S. 720, 725-26 (1984), courts
do not have discretion to impose the costs of
delay by the Board upon the wronged employees.
Finally, the overall equities in this case do not
favor NRM. It committed numerous violations of
the National Labor Relations Act, and those
violations led to the improper dismissal of
bargaining unit employees. In contrast, there is
no evidence of any wrongdoing on the part of the
Union or the striking workers. To refuse to
enforce the Board’s order because of time delays
that no one alleges are attributable to the Union
or the unit workers would unjustifiably compound
their injury.

In addition, we are not persuaded that
compliance with the Board’s order will impose an
unusual hardship on the employer. NRM contends
that the order is unreasonable because it would
be forced to buy back all its trucks from the
owner-operators and revert to a system of hauling
that it has not used in almost eight years. The
order, however, says nothing about where NRM
should procure its trucks, or whether it should
buy or lease them. NRM merely needs to make
trucks available so that the reinstated
bargaining unit employees can return to hauling
ready-mix. Furthermore, there is no evidence that
NRM will have any particular difficulty returning
its hauling business to unit employees; NRM
apparently continues to deliver ready-mix to its
customers just as it did eight years ago. NRM has
given us no reason to think that the transition
from subcontract hauling to in-house hauling
would be any more difficult than the 1992 switch
to using subcontractors. For all these reasons,
we conclude that the Board’s order is entitled to
be Enforced in its entirety.

FOOTNOTES

/1 Neither party has raised the question whether
this decision is exclusively one to be made under
federal law, or if state law bears on it as well.
We therefore proceed, as the parties did, as if
it is governed by federal law.

/2 NRM has not tried to justify its refusal to
rehire on the ground that it had hired
replacement workers for economic strikers, and
thus was entitled to turn away returning workers
who wanted jobs that had been filled. This is
understandable, as NRM’s entire point has been
that the hauling subset of its business had been
eliminated.