IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-60358
EXXON RESEARCH & ENGINEERING COMPANY;
EXXON COMPANY, U.S.A.; EXXON CHEMICAL
AMERICAS; EXXON CHEMICAL COMPANY,
Petitioners-Cross-Respondents,
versus
NATIONAL LABOR RELATIONS BOARD,
Respondent-Cross-Petitioner.
Petition for Review and Cross-Petition for Enforcement of an
Order of the
National Labor Relations Board
July 16, 1996
Before GARWOOD, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This case presents the question whether an employer's failure
to bargain with its unions regarding unilateral changes made to a
benefit plan governed by the Employee Retirement Income Security
Act, 29 U.S.C. §§ 1001 et seq., and ordered by the plan's trustees
constitutes an unfair labor practice. The National Labor Relations
Board held several divisions of Exxon Corporation and one of its
subsidiaries responsible for the changes authorized by the plan
trustees. The Exxon companies did not order the changes in the
plan's terms and we deny enforcement of the NLRB's order.
I.
Exxon Company, U.S.A., Exxon Chemical Americas, and Exxon
Chemical Company are divisions of Exxon Corporation. Exxon
Research & Engineering Company is a wholly-owned subsidiary of
Exxon. EUSA, ECA, and ERE operate a petrochemical refinery and
research complex in Baytown, Texas. ECC operates a chemical
manufacturing plant in Houston, Texas. We refer to the four Exxon
companies as "the Exxon subsidiaries"--their separate identities
are not material to this suit.
Four unions, the Gulf Coast Industrial Workers Union, the
Baytown Employees' Federation, the International Association of
Machinists & Aerospace Workers, Lodge 1051, and the International
Brotherhood of Electrical Workers Local No. 527, represent 1900 of
the employees in 10 distinct bargaining units at the Baytown and
Houston facilities. In late 1992, there were 10 separate
collective bargaining agreements in place between the four Exxon
subsidiaries and the four unions, one for each bargaining unit.
All but one of those agreements contained a provision identical or
substantially identical to the following:
This Agreement shall not affect the eligibility of
employees for participation in any company benefit plan
(annuity plan, thrift plan, disability plans,
contributory group life insurance plan, and
noncontributory group life insurance plan), dependency
pay for military leave and military-leave pay, or any
other Company benefit plan now in effect, all of which
plans and programs shall be governed by their separate
provisions. This provision, however, is not a waiver of
2
such right as the Union has to bargain concerning these
plans.1
In 1935, Exxon Corporation's predecessor, Standard Oil Company
of New Jersey, created the Thrift Plan to encourage long-term
savings and provide supplemental retirement income to company
employees. The Thrift Plan currently has $6 billion in assets and
includes approximately 35,000 participants. Five trustees
administer the Plan. Exxon retains the "virtually unbridled" power
to appoint, remove, and replace trustees at will. Under the Plan's
terms, employees contribute to the Plan and Exxon matches the
employees' contribution, up to 7% of each individual employee's
income. Significantly, the Plan allows participants to obtain
short-term loans from the Thrift Fund.
Changes may be made to the Plan's terms through one of two
mechanisms. First, the Plan's Trustor, Exxon, may amend the plan
pursuant to its authority under the Thrift Trust Declaration of
Trust. Second, the Plan trustees have limited authority to make
"administrative changes" to the Plan pursuant to various sections
of the Declaration, the mechanism at issue here.
In 1992, the trustees decided to make seven changes to the
Thrift Plan. Only two of the changes, both to the Thrift Plan's
1
The other plan between Exxon Chemical Co. and the GCIWU
provides in relevant part that "nothing in this Agreement shall
apply to or affect the Exxon Benefit Plan or any other of the
Company's benefit plans or programs. This provision, however, is
not a waiver of such rights as the Union has to bargain concerning
such plans or programs." Neither Exxon or the NLRB assert that
this agreement's different wording distinguishes it from the other
collective bargaining agreements.
3
loan program, concern us.2 Effective January 1, 1993, the maximum
number of allowable loans outstanding at one time were to be
reduced from four to two, and the minimum allowable loan amount was
increased from $40 to $1000. The Plan trustees enacted these
changes pursuant to the plan provision governing the loan program:
If an active participant, during the preceding six
months, has not borrowed any amount under this part,
then, to the extent and on the terms permitted by the
Trustee, such participant may at any time borrow from the
Trustee any amount of cash the participant specifies, but
not in excess of one-half of the accrued collateral value
of the participant's Thrift Fund Account on the date the
loan is granted.3
On August 12, 1992, David Clements, EUSA's human resources
manager for the Houston area, notified representatives of the four
unions of the proposed changes. Over two months later, the unions
demanded bargaining over the proposed changes. Responding to the
unions' demand, Clements met with the union representatives on
November 17, 1992. Clements asked the unions to withdraw their
request for bargaining. He informed them that their demand would
jeopardize the parties' bargaining relationship and that bargaining
would begin with "a blank sheet of paper." The unions reasserted
their request for bargaining, which the Exxon subsidiaries refused
2
The NLRB did not object to two of the changes in its
complaint. The ALJ found that, of the five amendments to which the
NLRB objected, three did not constitute "material, substantial, and
significant" changes so as to trigger the Exxon subsidiaries' duty
to bargain regarding those changes. The NLRB affirmed the ALJ's
finding on this point.
3
We assume but do not decide that the trustees possessed
the authority to make these changes to the loan program and that
the changes did not require an amendment to the Plan's Declaration
by Exxon itself.
4
as untimely. The unions subsequently filed unfair labor practice
complaints against the Exxon subsidiaries. The proposed changes to
the loan program went into effect as planned on January 1, 1993.
The NLRB Regional Director consolidated the unions' charges
and issued a complaint. The complaint alleged that the Exxon
subsidiaries violated § 8(a)(5) by refusing to bargain before
implementing the changes to their thrift plan and that they
violated § 8(a)(1) by threatening adverse consequences if the
unions pursued bargaining over the issue. The NLRB referred the
matter for a hearing before an Administrative Law Judge.
After conducting the hearing, the ALJ concluded that Exxon
violated § 8(a)(5) by refusing to bargain over the two plan
changes, namely, increasing minimum loan amount and reducing the
number of simultaneous loans. The ALJ also concluded that Exxon
violated § 8(a)(1) by informing the union representative that to
persist in seeking bargaining on these issues would "damage" the
bargaining relationship and that any such bargaining would "begin
with a blank sheet of paper." The ALJ ordered Exxon to cease and
desist from engaging in unfair labor practices and to bargain in
good faith over the two changes. However, the ALJ did not order
Exxon to rescind the plan amendments, reasoning that the Exxon
subsidiaries did not have the power to undo the changes--only the
plan trustees or Exxon Corporation, neither of which were a party
to the action, had such power. Both the Exxon subsidiaries and the
NLRB appealed the ALJ's order.
5
The NLRB adopted the ALJ's findings but ordered Exxon to
rescind the plan changes. The NLRB did not address the ALJ's
finding that the Exxon subsidiaries did not have the power to
rescind the Thrift Plan changes, but rather simply observed that
"it is the Board's customary policy to order Respondents to rescind
unilateral changes and to reinstate the conditions that existed
prior to the unilateral action." Member Cohen dissented in part.
Although he agreed that Clements' statements violated § 8(a)(1), he
disagreed that the Exxon subsidiaries had violated § 8(a)(5) by
refusing to bargain over the proposed changes to the loan program.
In addition, he agreed with the ALJ's refusal to order a rescission
of the plan changes because the Exxon subsidiaries "have no power
to rescind a change ordered by the trustees, or to compel
reinstitution of a benefit under the Thrift Plan." Exxon
petitioned for review of the NLRB's order, and the NLRB cross-
petitioned for enforcement of its order. We have jurisdiction
pursuant to 29 U.S.C. § 160(e), (f).
II.
Section 8(a)(5) of the National Labor Relations Act prohibits
an "employer" from "refus[ing] to bargain collectively with the
representatives of his employees." 29 U.S.C. § 158(a)(5). The
NLRB found that the changes to the Thrift Plan by Exxon
subsidiaries made a unilateral change in the conditions of
employment by "implementing" the plan changes made by the trustees.
6
The Exxon subsidiaries challenge the NLRB's finding.
Specifically, the Exxon subsidiaries contend that they did not
order or implement the changes to the loan program; rather, the
trustees of the plan ordered the changes. The NLRB responds that
substantial evidence supports the NLRB's finding that Exxon, not
the Plan trustees, violated § 8(a)(5). The NLRB points to the
testimony of EUSA's chief human resources manager, James Rouse, who
testified that Exxon developed and proposed the amendments to
Exxon's senior management. We agree with the Exxon subsidiaries.
The NLRB's finding that the Exxon subsidiaries "implemented"
the loan program changes finds no support in the record. The
Thrift Plan trustees ordered several changes to the loan program.
Those changes went into effect on January 1, 1993 as specified by
the trustees. The NLRB does not explain what the Exxon
subsidiaries did to "implement" these changes. Indeed, the record
indicates that the trustees' order was sufficient to enact these
changes to the loan program, and no additional action by the Exxon
subsidiaries was necessary or taken.
The NLRB's reliance on Rouse' testimony is misplaced. At one
point, Rouse testified that the Thrift Plan trustees simply
implemented changes ordered by Exxon Corporation itself. At
another point, he testified that the trustees actively designed and
implemented the changes after receiving recommendations from
Exxon's human resources department. Rouse's testimony, which led
the ALJ to find that the trustees ordered the loan program changes
after "an uncertain internal process," shows only that Exxon and
7
its subsidiaries may have played some role in the origins of the
loan program changes. Rouse's testimony does not support the
finding that the Exxon subsidiaries "implemented" the changes
ordered by the trustees.
The difficulty in developing a remedial order to rescind the
plan changes confirms the NLRB's error. The ALJ refused to order
the Exxon subsidiaries to rescind the plan changes because it found
that they "have no powers whatsoever to 'rescind' a change ordered
by the trustee(s), nor in any other manner to compel the
'reinstitution' of a 'benefit' under the Thrift Plan itself."
Rather, the ALJ explained that "[t]o achieve those kinds of results
requires action by the trustee(s), or perhaps by Exxon Corporation
itself, as the trustor with powers to 'amend' the Trust
Declaration, and powers to remove trustees and replace them, if
need be, with ones willing to effect such results." Stated
bluntly, the Exxon subsidiaries could not rescind the changes
because they never made them in the first place. The NLRB ignored
this fundamental fact in ordering rescission of the plan changes.
In short, we are persuaded that the Exxon subsidiaries took no
action that constitutes a unilateral change in the conditions of
employment. We emphasize that there is no contention that the
Thrift Plan trustees were acting as the Exxon subsidiaries' agent.
Cf. NLRB v. Truck Drivers Local Union No. 449, 728 F.2d 80 (2d Cir.
1984) (holding that union charged with an unfair labor practice
resulting from the trustees implementation of a plan amendment was
not responsible for the acts of the trustees since the trustees
8
were not the union's agents); NLRB v. Driver Salesmen, Etc., 670
F.2d 855 (9th Cir. 1982) (holding trust was not union's agents
where union did not "cause" trust to implement plan changes).
The NLRB responds that the Exxon subsidiaries' duty to bargain
arose prior to the trustees' implementation of the plan amendments.
Stated another way, the NLRB contends that the Exxon subsidiaries
violated § 158(a)(5) by refusing to bargain over changes that they
did not make but that affected their employees' conditions of
employment. We disagree.
The NLRB's position would mark an unprecedented expansion of
NLRB v. Katz, 369 U.S. 736, 743 (1962). Katz held that an employer
that unilaterally changed its employees' conditions of employment
violated § 158(a)(5); it did not hold that an employer violates
§ 158(a)(5) by refusing to bargain over changes made by a separate
legal entity over whom the employer possesses no power. The NLRB
does not cite any authority for this proposition, and we do not
embrace it now. Imagine an employer who agrees to provide an on-
site cafeteria for its employees by contracting with a food
services company. The employer further agrees to subsidize the
cafeteria by paying a fixed percentage of the cost of the food
purchased by its employees. However, the employer maintains no
control over the prices charged by the food services company.
Under the NLRB reasoning, the employer would violate § 158(a)(5) by
refusing to bargain with the union if, during the term of the
collective bargaining agreement, the food services company raised
9
the price of the food. See Ford Motor Co. v. NLRB, 441 U.S. 488,
503 (1979); id. at 505 (Blackmun, J., concurring in the result).
We hold that the record does not support the finding that the
Exxon subsidiaries unilaterally changed their employees' conditions
of employment. We express no opinion whether the NLRB has the
authority to regulate ERISA plan trustees. See NLRB v. Amax Coal
Co., 453 U.S. 322 (1981).4 Nor do we address whether the unions
waived, contractually or otherwise, their right to bargain mid-term
over Thrift Plan changes. These are thorny questions best left for
a case presenting them.
III.
Section 8(a)(1) of the National Labor Relations Act makes it
unlawful for employers "to interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed in section 157
of this title," such as the right to bargain collectively. 29
U.S.C. § 158(a)(1). The NLRB unanimously held that the Exxon
subsidiaries violated that section by threatening adverse
consequences if the Unions pursued bargaining over the Thrift Plan
changes. The basis for this violation is Clements' statement to
the unions at the November 17 meeting that their demands to bargain
about the changes would injure the parties' bargaining relationship
and that bargaining would begin with "a blank sheet of paper."
4
The NLRB did not attempt to assert jurisdiction over the
Thrift Plan trustees here by including them in this suit.
10
The Exxon subsidiaries do not dispute that Clements made the
statements. Rather, the companies argue that Clements' statements
were not coercive when viewed in context. Specifically, they argue
that while such statements may be coercive when made to rank-and-
file employees in the course of a union organizing campaign, they
are not unlawful when made to experienced union presidents in the
context of a mature bargaining relationship. The NLRB responds
that distinction is unfounded and that, if anything, Clements'
statements are more coercive when made to union presidents rather
than ordinary employees.
At the outset, we reject the NLRB's claim that the simple
statement that bargaining will begin with "a blank sheet," by
itself, constitutes an unlawful threat to engage in regressive
bargaining. There are no magical phrases the mere incantation of
which are coercive and therefore violate § 8(a)(1). Rather,
whether a particular statement is coercive "depends upon the
context in which it is uttered." TRW-United Greenfield Div. v.
NLRB, 637 F.2d 410, 420 (5th Cir. 1981). "When a close question
exists, '[t]he presence of contemporaneous threats or unfair labor
practices is often a critical factor in determining whether there
is a threatening color to the employer's remarks.'" Id. (quoting
Coach & Equipment Sales Corp., 228 N.L.R.B. 440, 441 (1977)); see
also Shaw's Supermarkets, Inc. v. NLRB, 884 F.2d 34, 40 (1st Cir.
1989) (holding that those cases finding "bargaining from scratch"
statements unlawful typically involved "other serious unfair labor
practices").
11
We are persuaded that, placed in context, Clements' statements
do not violate § 8(a)(1). As our opinion today makes clear, the
statements were made in circumstances free from other unfair labor
practices. In addition, there is no evidence in the record that
Clements' statements were coupled with other statements or company
conduct that would suggest to a reasonable audience that the
companies intended to eliminate benefits before bargaining. See
TRW, 637 F.2d at 421. In short, Clements' statements did not
violate § 8(a)(1).
IV.
The Exxon subsidiaries did not unilaterally change the Thrift
Plan, nor did they threaten to engage in regressive bargaining if
the unions persisted in their demand for bargaining.
PETITION FOR REVIEW GRANTED; ENFORCEMENT DENIED.
12