United States Court of Appeals
For the First Circuit
Nos. 05-2623
05-2793
BATH MARINE DRAFTSMEN'S ASSOCIATION;
LOCAL LODGES S-6 & S-7, DISTRICT LODGE 4, INTERNATIONAL
ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO,
Petitioners,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent,
and
BATH IRON WORKS CORPORATION,
Intervenor.
ON PETITIONS FOR REVIEW OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD
Before
Torruella, Lynch, and Lipez,
Circuit Judges.
James B. Coppess, with whom Catherine Fayette, Aaron D.
Krakow, Allison Beck, and Daniel W. Sherrick, were on brief, for
petitioners.
Kira Dellinger Vol, Attorney, National Labor Relations Board,
with whom Fred B. Jacob, Supervisory Attorney, Ronald E. Meisburg,
General Counsel, John E. Higgins, Jr., Deputy General Counsel, John
H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy
Associate General Counsel, were on brief, for respondent.
William J. Kilberg, P.C., with whom Eugene Scalia, William M.
Jay, and Gibson, Dunn & Crutcher LLP, were on brief, for
intervenor.
Charles I. Cohen, with whom Daniel P. Bordoni, and Morgan,
Lewis & Bockius, LLP, were on brief, for amicus curiae Council on
Labor Law Equality.
January 29, 2007
TORRUELLA, Circuit Judge. This case arises from an
unfair labor practice charge brought by three unions against an
employer for unilaterally merging an employee pension plan with
that of its parent company. The National Labor Relations Board
(the "Board") dismissed the complaint, finding that the employer
had a sound arguable basis for interpreting the employees' contract
as granting it the authority to merge the pension plan without the
unions' consent. After careful consideration, we affirm the
Board's order.
I.
A. The Parties
Bath Iron Works Corporation ("the Company") builds
surface warships for the United States Navy. Three unions have
long represented the Company's employees covered under the relevant
pension plan: Local Lodge S-6 ("S-6") of the International
Association of Machinists and Aerospace Workers ("IAM"), Local
Lodge S-7 ("S-7") of the IAM, and the Bath Marine Draftsmen's
Association ("BMDA," collectively "the Unions").
B. The Pension Plan
The Company established the Bath Iron Workers Pension
Plan for Hourly Employees (the "Plan") in 1963. The Plan is
governed by the Employee Retirement Income Security Act of 1974
("ERISA"). Article XII of the Plan addresses amendment,
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termination, and merger.1 Article 12.1 provides that "[s]ubject to
the applicable provisions of any collective bargaining agreement,
the Company shall have the right to amend, modify, or suspend the
Plan." Under Article 12.2, the Company "reserves the right to
terminate the Plan." Article 12.5 governs the transfer of Plan
assets in the case of merger or consolidation, but does not mention
who has the authority to merge the Plan.2
New benefits stopped accruing under the Plan for S-6 and
S-7 members on August 31, 1994, when those employees switched to an
IAM multiemployer pension plan. Nonetheless, S-6 and S-7 Plan
participants are still eligible for certain benefits under the Plan
based on their prior participation.
C. The Collective Bargaining Agreements
During the relevant time period, March 1998 to March
2001, each union had a collective bargaining agreement ("CBA") with
the Company. The CBAs between the Company and S-6 and S-7
1
The Company unilaterally amended Articles 12.1 and 12.2 on
September 13, 1995. The Board noted in its decision below that it
did not need to choose between the original and new versions
because both allow the Company to modify the Plan. Bath Iron Works
Corp., 345 N.L.R.B. No. 33, at 2 n.2 (Aug. 27, 2005). We will cite
to the original Plan, as did the parties in their briefs.
2
Article 12.5 provides: "In the case of any merger or
consolidation of the Plan with . . . any other plan of deferred
compensation . . ., the assets of the Plan applicable to such
Participants shall be transferred to the other plan only if each
Participant in the Plan would . . . receive a benefit immediately
after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer . . . ."
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respectively both briefly refer to the Plan. Both CBAs also
provide that the language therein represents only highlights of the
Company's benefits program, as the terms and conditions of specific
benefits are governed by separate plan documents.3 BMDA's CBA
discusses the Plan at greater length, providing that the Plan
"shall remain in full force and effect in accordance with the
provisions thereof."
D. The Plan Merger
General Dynamics Corporation acquired the Company in
1995. During its 1998 negotiations with BMDA, the Company
announced that it was considering a merger of the Plan, which was
underfunded, into the General Dynamics Pension Plan. BMDA
requested bargaining over the merger of the pension plans, but the
Company took the position that the merger was too speculative to
warrant negotiations. Shortly after concluding contract
negotiations with BMDA, the Company received permission from
General Dynamics and the government to merge the plans. The
Company then discussed the merger with the Unions, but did not gain
3
The S-6 CBA states: "Your Benefits Program consists of Plans
that provide you financial security . . . . These Plans are ERISA
Plans and their terms and conditions are governed by Plan Documents
. . . ." The S-7 CBA states: "The language contained in this
Agreement is intended to represent only highlights of the BIW
Employee Benefits Program. All of the terms and conditions in
their entirety are governed by Plan Documents and summarized in a
Summary Plan Description."
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their consent. Finally, in October 1998, the Company unilaterally
merged the Plan into the General Dynamics Pension Plan.
E. Prior Proceedings
On October 7, 1998, S-6 and S-7 filed unfair labor
practice charges against the Company based on its merger of the
Plan, and BMDA followed with its charge on November 27, 1998. A
consolidated complaint was issued on July 29, 1999.
The Administrative Law Judge ("ALJ") found that the
merger of the Plan violated Sections 8(a)(1) and (5) and 8(d) of
the National Labor Relations Act ("NLRA") by materially,
substantially, and significantly modifying the terms and conditions
of employment of the represented employees. The ALJ also
determined that the Unions had not clearly and unmistakably
relinquished their right to bargain over the merger.
The Board reversed the ALJ and dismissed the complaint on
the ground that the ALJ had applied the incorrect standard in the
case. Bath Iron Works Corp., 345 N.L.R.B. No. 33 (Aug. 27, 2005).
While acknowledging that the "clear and unmistakable waiver"
standard applies in an 8(a)(5) unilateral change case, the Board
concluded that "the General Counsel's sole allegation is the
allegation of unlawful modification of the contracts within the
meaning of Section 8(d)." Id. at 3. In such contract modification
cases, the Board stated, "the issue is whether the [Company] had a
sound arguable basis for its actions." Id. at 5. The Board went
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on to determine that the Company did have a sound arguable basis
for its interpretation that the CBA and the Plan documents allowed
the merger. Id. The Board declined to rule on whether the
Company's interpretation of the contracts was correct, leaving such
determinations to arbitrators and the courts. Id.
BMDA petitioned for review of the Board's decision on or
about October 24, 2005, and S-6 and S-7 followed on December 1.
The Company moved to intervene on December 21. The cases were
consolidated into this appeal on December 23.
The Unions appeal the Board's dismissal on two grounds:
First, the Unions argue that the Board incorrectly applied the
"sound arguable basis" standard rather than the "clear and
unmistakable waiver" standard. Second, they contend that even if
the Board applied the correct standard, it erred in finding that
the CBAs arguably granted the Company the authority to unilaterally
merge the Plan. We address each of the Unions' arguments in turn.4
II.
A. Statutory Provisions
Sections 8(a)(5) and 8(d) define an employer's obligation
to bargain collectively with its employees' representatives
regarding "wages, hours, and other terms and conditions of
employment." 29 U.S.C. § 158(a)(5), (d). An employer generally
4
We acknowledge the able assistance provided by the briefs,
including those filed by the intervenor and amicus curiae.
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may not institute changes with respect to these mandatory subjects
of collective bargaining until the parties reach a good faith
impasse in bargaining. Litton Fin. Printing Div. v. NLRB, 501 U.S.
190, 198 (1991) (citing NLRB v. Katz, 369 U.S. 736 (1962)). A
union may, however, agree to waive its statutory rights and allow
the employer to make changes with respect to a mandatory subject
without further bargaining. See Metro. Edison Co. v. NLRB, 460
U.S. 693, 705 (1983) ("This Court long has recognized that a union
may waive a member's statutorily protected rights . . . ."); NLRB
v. C & C Plywood, 385 U.S. 421, 564 (1967) (discussing the Board's
power to determine whether a union agreed to give up statutory
safeguards).
In order to stabilize collective bargaining agreements,
the 1947 revision of the NLRA, the Labor Management Relations Act
(LMRA), enacted both the "provisions in §§ 8(d) and 301(a) to
prohibit unilateral mid-term modifications and terminations of CBAs
and to confer federal jurisdiction over suits for contract
violations." Allied Chem. & Alkali Workers v. Pittsburgh Plate
Glass Co., 404 U.S. 157, 186 (1971).
Section 8(d) provides in pertinent part:
[W]here there is in effect a
collective-bargaining contract covering
employees in an industry affecting commerce,
the duty to bargain collectively shall also
mean that no party to such contract shall
terminate or modify such contract, unless
[certain requirements are met].
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. . . [These requirements] shall not be
construed as requiring either party to discuss
or agree to any modification of the terms and
conditions contained in a contract for a fixed
period, if such modification is to become
effective before such terms and conditions can
be reopened under the provisions of the
contract.
29 U.S.C. § 158(d). In enacting § 8(d), "Congress intended . . . ,
at least in part, to overturn earlier [rulings] that even issues
squarely covered in a written labor contract were subject to
continuing renegotiation during the life of the contract." Gorman
& Finkin, Basic Text on Labor Law 625 (2d ed. 2004). From the
start, Board members have approached the interpretation of the
section with different philosophies. See id. at 624-27 (describing
divisions among Board members evidenced in Jacobs Mfg. Co., 94
N.L.R.B. 1214 (1951), enforced, 196 F.2d 680 (2d Cir. 1952)).
The role played by the Board in § 8(d) cases is limited.
The section applies only to mandatory, not permissive, subjects of
bargaining. Allied Chem., 404 U.S. at 184. It is meant to prevent
one party from engaging in economic warfare during the term of the
contract by disrupting the economic relationship. Id. at 187. The
Board's role is to prevent such economic warfare by prohibiting as
unfair labor practices clear mid-term modifications of a contract
that disrupt the economic relationship. In such situations, the
Board may award remedies including a cease and desist order
(effectively, an order to adhere to the contract); an order for an
employer to compensate employees for unlawfully reduced wages,
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benefits, or bonuses; or an order stripping employees who
unlawfully strike of their status as employees, thereby
"subject[ing] them to immediate discharge and jeopardiz[ing]
forthwith the union's status as bargaining representative." Gorman
& Finkin, supra, at 570.
It is clear that § 8(d) is not meant to confer on the
Board broad powers to interpret CBAs. In enacting § 301, Congress
determined "that the Board should not have general jurisdiction
over all alleged violations of collective bargaining agreements and
that such matters should be placed within the jurisdiction of the
courts." C & C Plywood, 385 U.S. at 427 (footnote omitted). To do
otherwise "would have been a step toward governmental regulation of
the terms of those agreements," rather than addressing the
mechanisms by which such agreements could be reached. Id. Thus,
§ 8(d) is commonly understood as being constrained by § 301.
In turn, § 301(a) gives the courts, not the Board,
jurisdiction over certain disputes, providing:
Suits for violation of contracts
between an employer and a labor organization
representing employees in an industry
affecting commerce as defined in this Act, or
between any such labor organizations, may be
brought in any district court of the United
States having jurisdiction of the parties
. . . .
29 U.S.C. § 185(a). The section was intended to ensure that
variations in state law of contract and procedure did not frustrate
judicial enforcement of collective bargaining agreements. Gorman
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& Finkin, supra, at 736. To that end, § 301(a) conferred federal
court jurisdiction over suits for breach of collective bargaining
agreements. In the event of such a breach, federal courts may
award damages, and in some cases they may award equitable relief
(essentially an order to comply with the contract). See Boys
Mkts., Inc. v. Retail Clerks Union, 398 U.S. 235, 248, 253-55
(1970) (noting the availability of an action for damages, holding
that injunctive relief is appropriate in some § 301 cases despite
the anti-injunction provisions of the Norris-LaGuardia Act, and
directing that such relief be awarded).
Under C & C Plywood, the Board does have some authority
to construe collective bargaining agreements when raised by the
employer as a defense to an unfair labor practice charge. 385 U.S.
at 428. But in Litton, the Supreme Court stressed that
[a]lthough the Board has occasion to interpret
collective-bargaining agreements in the
context of unfair labor practice adjudication,
the Board is neither the sole nor the primary
source of authority in such matters.
"Arbitrators and courts are still the
principal sources of contract interpretation."
Section 301 of the [LMRA] "authorizes federal
courts to fashion a body of federal law for
the enforcement of . . . collective bargaining
agreements."
501 U.S. at 202 (omission in original) (citations omitted) (quoting
NLRB v. Strong, 393 U.S. 357, 360-361 (1969); Textile Workers v.
Lincoln Mills of Ala., 353 U.S. 448, 451 (1957) (emphasis added)).
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B. Standards of Review
The duty to bargain thus encompasses both those cases in
which the employer unilaterally seeks to change the terms and
conditions of employment without bargaining and those cases in
which the employer unilaterally seeks to modify the terms and
conditions of a contract already in place. The Board generally
refers to a unilateral change case as a § 8(a)(5) violation and a
contract modification case as a § 8(d) violation, notwithstanding
that the latter is technically also a § 8(a)(5) violation. Compare
NLRB v. Katz, 369 U.S. 736, 736 (1962) (unilateral change), with
NLRB v. Bildisco & Bildisco, 465 U.S. 513, 532-33 (1984) (contract
modification).
In § 8(a)(5) unilateral change cases, the Board generally
applies the "clear and unmistakable waiver" standard, under which
the Board determines whether the union has clearly and unmistakably
relinquished its statutory rights to bargain over the mandatory
subject at issue. See, e.g., Trojan Yacht, 319 N.L.R.B. 741, 742
(1995).
In contrast, the Board applies the "sound arguable basis"
standard in § 8(d) contract modification cases. The Board will not
find an unfair labor practice if (1) the employer's interpretation
of its contractual rights has a sound arguable basis in the
contract and (2) the employer was not motivated by union animus,
acting in bad faith, or in any way seeking to undermine the union's
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status as a collective bargaining representative.5 See, e.g.,
Westinghouse Elec. Corp., 313 N.L.R.B. 452, 452 (1993), enforced
mem. sub nom. Salaried Employees Ass'n v. NLRB, 46 F.3d 1126 (4th
Cir. 1995).
The Board articulated the reasons for the sound arguable
basis standard in Vickers, Inc., stating:
The Board is not the proper forum for parties
seeking an interpretation of their
collective-bargaining agreement. Where, as
here, an employer has a sound arguable basis
for ascribing a particular meaning to his
contract and his action is in accordance with
the terms of the contract as he construes it,
and there is "no showing that the employer in
interpreting the contract as he did, was
motivated by union animus or was acting in bad
faith," the Board ordinarily will not exercise
its jurisdiction to resolve a dispute between
the parties as to whether the employer's
interpretation was correct.
153 N.L.R.B. 561, 570 (1965) (footnotes omitted).
The standard applicable in a given case is often very
clear, depending, as described above, upon whether the union
alleges a unilateral change without bargaining to impasse or a
modification in violation of an existing contract without union
consent. However, the choice of analytical framework is not as
straightforward when the union alleges a § 8(a)(5) unilateral
change and the employer defends with a claim of contractual
5
In addition, the Board will not find a § 8(d) contract
modification violation unless it first "identif[ies] a specific
term 'contained in' the contract that the [employer's action]
modified." Milwaukee Spring Div., 268 N.L.R.B. at 602.
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privilege to act unilaterally. Traditionally, the Board applies
the clear and unmistakable waiver standard, reviewing the contract
to determine whether the union clearly and unmistakably waived its
statutory right to bargain with respect to a particular action.
Bath Iron Works Corp., 345 N.L.R.B. No. 33, at 3; see also Trojan
Yacht, 319 N.L.R.B. at 742; Enloe Med. Ctr., 343 N.L.R.B. No. 61
(Oct. 29, 2004), enforcement denied, Enloe Med. Ctr. v. NLRB, 433
F.3d 834 (D.C. Cir. 2005); Amoco Chem. Co. & Oil, 328 N.L.R.B. 1220
(1999), enforcement denied, BP Amoco Corp. v. NLRB, 217 F.3d 869,
873 (D.C. Cir. 2000); U.S. Postal Serv., 306 N.L.R.B. 640 (1992),
enforcement denied, NLRB v. U.S. Postal Serv., 8 F.3d 832 (D.C.
Cir. 1993).
At times, however, the Board has determined, without much
explanation, that the dispute was solely one of contract
interpretation and that it was "not compelled to endorse either of
the[] two equally plausible interpretations." NCR Corp., 271
N.L.R.B. 1212, 1213 (1984) (quoting Vickers, Inc., 153 N.L.R.B. at
570);6 see also Bath Iron Works Corp., 345 N.L.R.B. No. 33, at 8
(Liebman, Member, dissenting). Instead, in these cases, the Board
applied the sound arguable basis standard and declined to "enter
the dispute to serve the function of arbitrator in determining
6
The concurring opinion states that NCR Corp., the principal case
in its line, is a § 8(d) contract modification case. We read the
case differently, as one in which the union alleged a unilateral
change without bargaining to impasse, and the employer defended
with a claim of contractual privilege.
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which party's interpretation is correct." NCR Corp., 271 N.L.R.B.
at 1213.
To further complicate the issue, the Board has a
"fundamental and long-running disagreement" with the District of
Columbia Circuit over the appropriate standard in § 8(a)(5) cases
in which the employer claims a contractual right to act
unilaterally. Enloe Med. Ctr., 433 F.3d at 835. While
acknowledging the Board's prerogative to apply the clear and
unmistakable waiver standard in these cases, the D.C. Circuit
asserts that it owes no deference to the Board's choice of standard
when the unfair labor practice turns solely on the interpretation
of a labor contract. Id. at 837-38 ("[T]he normal deference we
must afford the Board's policy choices does not apply in this
context because the federal judiciary does not defer to the Board's
interpretation of a [CBA]."). Rather, if the contract covers the
subject matter of the dispute, the D.C. Circuit will construe the
contract de novo to resolve the unfair labor practice charge,
consistent with its authority under § 301(a). U.S. Postal Serv.,
8 F.3d at 837 ("Because the courts are charged with developing a
uniform federal law of labor contracts under section 301 . . ., we
accord no deference to the Board's interpretation of labor
contracts."); accord BP Amoco Corp., 217 F.3d at 873.
The D.C. Circuit explains its "contractual coverage"
approach in NLRB v. United States Postal Service:
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When employer and union bargain about a
subject and memorialize that bargain in a
[CBA], they create a set of rules governing
their future relations. Unless the parties
agree otherwise, there is no continuous duty
to bargain during the term of an agreement
with respect to a matter covered by the
contract.
8 F.3d 832, 836 (D.C. Cir. 1993). Thus, once a subject is "covered
by" a CBA, any dispute regarding that subject is an issue of
contract interpretation, and the question of whether a union has
waived its right to bargain over the subject does not come into
play. Id. at 836-37. In summary, the District of Columbia Circuit
considers "the 'covered by' and 'waiver' inquiries . . .
analytically distinct: A waiver occurs when a union knowingly and
voluntarily relinquishes its right to bargain about a matter; but
where the matter is covered by the [CBA], the union has exercised
its bargaining right and the question of waiver is irrelevant."
Id.
III.
In the case before us, the Board avoided the controversy
surrounding the applicable standard when a union alleges a § 8(a)
(5) unilateral change and the employer defends with contractual
privilege by determining sua sponte that the General Counsel
alleged only a § 8(d) contract modification. Bath Iron Works
Corp., 345 N.L.R.B. No. 33, at 3. The Unions argue that the
General Counsel alleged both a § 8(d) contract modification and a
§ 8(a)(5) unilateral change, and that the Board therefore erred in
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failing to apply the clear and unmistakable waiver standard to
their unilateral change claim. Alternatively, the Unions argue
that the sound arguable basis standard incorporates the clear and
unmistakable waiver standard.
A. The General Counsel's Allegations
As a preliminary matter, the Board contends that the
Unions are barred under Section 10(e) of the NLRA, 29 U.S.C.
§ 160(e), from arguing that the General Counsel alleged a § 8(a)(5)
unilateral change violation because the Unions did not move for
reconsideration of the Board's sua sponte holding.7 See Woelke &
Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982) (holding
that the Court of Appeals lacked jurisdiction to consider whether
the Board had erred in finding that certain picketing was lawful
because no party had raised the issue to the Board, either during
the initial proceedings or on motion for reconsideration); Int'l
Ladies' Garment Workers' Union v. Quality Mfg. Co., 420 U.S. 276,
281 n.3 (1975) (holding that the Court did not have jurisdiction to
consider an argument not presented to the Board in a motion for
reconsideration). Section 10(e) does not, however, "deprive the
court of jurisdiction if the Union gave the Board 'adequate notice'
7
In addition, amicus curiae Council on Labor Law Equality
supplements that argument by arguing waiver under 29 C.F.R.
§ 102.46(g) because no exception to the ALJ's treatment of the case
as involving a § 8(d) claim was ever filed by the General Counsel.
We note the General Counsel was the prevailing party before the
ALJ, and it was the Company that filed the exceptions.
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of the argument it seeks to advance on review." Am. Postal Workers
Union v. NLRB, 370 F.3d 25, 28 (D.C. Cir. 2004); see also NLRB v.
St. Regis Paper Co., 674 F.2d 104, 108 n.4 (1st Cir. 1982)
(refusing to hear an argument that was not presented to the Board
"either initially or via a motion for reconsideration").
It is unfair to say that the Board did not have adequate
notice of the Unions' position that the General Counsel raised a
§ 8(a)(5) unilateral change claim. The General Counsel's brief to
the Board argued the unilateral change claim, the Company's failure
to bargain to impasse, and the Unions' lack of waiver of its
statutory right to bargain. According to the Board's own
discussion below, these arguments are relevant only to § 8(a)(5)
claims, and not to § 8(d) contract modification claims. Bath Iron
Works Corp., 345 N.L.R.B. No. 33, at 3 ("The 'unilateral change'
case and the 'contract modification' case are fundamentally
different . . . . The allegation [in a 'unilateral change' case]
is a failure to bargain. . . . [A] defense to a unilateral change
can be that the union has waived its right to bargain."). It seems
clear, then, that the Board had adequate notice that the General
Counsel and the Unions believed that the § 8(a)(5) unilateral
change issue was before the Board, and therefore the issue was
preserved for appeal.
Although the General Counsel's Consolidated Complaint
could have been clearer, it does in fact allege both a § 8(a)(5)
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unilateral change violation and a § 8(d) contract modification
violation. The Complaint alleges that the Company "engaged in the
conduct described . . . without [the Unions'] consent." In the
next subparagraph, the Complaint alternatively alleges that the
Company "engaged in the conduct described . . . without affording
[the Unions] an opportunity to bargain with respect to this conduct
and the effects of this conduct." Again, as the Board explained
below, consent is only relevant to a § 8(d) violation, and
bargaining is only relevant to a § 8(a)(5) violation. Thus, the
former allegation describes a § 8(d) contract modification without
the Unions' consent, whereas the latter alternative allegation
describes a § 8(a)(5) unilateral change without bargaining with the
Unions.
B. Appropriate Standard in a § 8(a)(5) Claim with a Contractual
Defense
The Unions argue that the clear and unmistakable waiver
standard applies to § 8(a)(5) unilateral change claims, regardless
of the employer's defense. The Board below agreed that the clear
and unmistakable waiver standard is appropriate to § 8(a)(5)
allegations. When the employer responds to the unilateral change
allegation with a claim of contractual right to act unilaterally,
however, the Board has not been consistent in its choice of
standard, as explained above. In such cases, the Board is not
entitled to the normal deference we owe it. See Local 777,
Democratic Union Org. Comm. v. NLRB, 603 F.2d 862, 871-72 (D.C.
-19-
Cir. 1978) ("The vacillation of the NLRB vitiates the deference we
would otherwise show to its very considerable expertise in strictly
labor matters."); see also Wilcox v. Ives, 864 F.2d 915, 924-25
(1st Cir. 1988) ("The[] general admonitions for judicial review of
agency decisions are even more exacting when the courts are faced
with inconsistent agency positions . . . .").
Rather, we adopt the District of Columbia Circuit's
contract coverage test to determine whether the Unions have already
exercised their right to bargain. See U.S. Postal Serv., 8 F.3d at
836. If so, the waiver standard is meaningless. See id. at 836-
37. The unfair labor practice determination depends solely on the
interpretation of the contract in place, and the appropriate
standard for the Board to apply is the sound arguable basis
standard. See NCR Corp., 271 N.L.R.B. at 1213. The Board has only
limited authority to interpret labor contracts and should not act
as an arbitrator in contract interpretation disputes. See id.
This framework is consistent with the NLRA and the NCR
Corp. line of Board cases. It preserves for the courts and
arbitrators the authority to interpret labor contracts, while
permitting the Board to find an unfair labor practice when the
employer has not fulfilled its duty to bargain.
Moreover, this approach unifies the Board's disparate
approaches to § 8(d) contract modification claims and to § 8(a)(5)
unilateral change claims to which the employer has a legitimate
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contractual defense. Unions can and do allege both, as here, and
the unfair labor practice determination in both rests on an
interpretation of the contract. Yet, the Board traditionally
applies vastly different standards to the two identical situations.
Further, the Board has not clearly articulated a test for
distinguishing between the two claims -- and therefore the two
applicable standards -- when both are alleged. C.f., e.g., St.
Vincent Hosp., 320 N.L.R.B. 42 (1995) (affirming the ALJ's § 8(d)
determination and thus finding it unnecessary to reach the ALJ's
alternative § 8(a)(5) determination).
In determining whether a subject is covered by a CBA,
such that the sound arguable basis standard is appropriate, we will
consider whether the parties bargained over the mandatory subject
at issue. The Board has determined that the identity of an ERISA
plan sponsor is a mandatory subject of bargaining. Carrier Corp.,
319 N.L.R.B. 184, 196 (1995). It is apparent from the language of
the CBAs that the parties bargained over the identity of the Plan
sponsor, and thus that the CBAs cover the subject. All three CBAs
explicitly identify the Plan, and the General Counsel admitted in
his brief to the Board that "the identity of the pension plan was
a part of the collective bargaining agreement." Furthermore,
although it is unclear whether the CBAs authorize a unilateral
change in the identity of the Plan sponsor, such as occurred when
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the Company merged the Plan, these issues can only be resolved by
interpreting the contract.
Because the CBAs cover the subject matter of the present
dispute, the sound arguable basis standard applies. Thus the Board
did not err below by failing to apply the clear and unmistakable
waiver standard.
C. Appropriate Standard in a § 8(d) Contract Modification Claim
The Unions also argue that the Board applied the wrong
standard in analyzing the case as a § 8(d) contract modification
violation. They argue that because the Company defended on the
basis of a contractual provision, the Board should have required
the Company to show a clear and unmistakable waiver of the Unions'
right to bargain. The Unions make this argument by analogizing to
certain § 8(a)(5) unilateral change cases in which the employer
defended on the basis of a management rights clause in a CBA. They
argue that even if the sound arguable basis test does apply in
§ 8(d) cases, "where [a contractual defense] rests on an alleged
waiver, the 'sound arguable basis' analysis incorporates the 'clear
and unmistakable waiver' standard." We disagree.
As discussed above, the Board has traditionally chosen to
use different tests when ruling on § 8(a)(5) unilateral change
claims and § 8(d) contract modification claims. Even when the
Board determines that a § 8(a)(5) unfair labor practice charge
turns solely on the interpretation of a contract, it applies the
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sound arguable basis standard to the exclusion of the clear and
unmistakable waiver standard. To our knowledge, the Board has
never required the showing of a clear and unmistakable waiver of
the union's right to bargain in order to establish a sound arguable
basis for the employer's interpretation of a contract. As
explained at length above, the two standards are analytically
distinct. NLRB v. U.S. Postal Serv., 8 F.3d 832, 836 (D.C. Cir.
1993). Thus, the Unions are incorrect to suggest that the sound
arguable basis standard incorporates to any extent the clear and
unmistakable waiver standard.
IV.
Finally, the Unions argue that the Board erred in holding
that the Plan documents were even arguably incorporated into the S-
6 and S-7 CBAs,8 and that the BMDA CBA cannot reasonably be read to
grant the Company the authority to alter the Plan sponsor.
A. The Relationship of the Plan Documents to the S-6 and S-7 CBAs
In response to the General Counsel's unfair labor
practice charges, the Company stated that in merging the Plan into
the General Dynamics pension plan it acted pursuant to authority
granted it in the Plan documents, which it said were incorporated
into the three Unions' CBAs. The Board, in applying the sound
arguable basis test, did not hold that the Plan documents were
8
The Unions concede that the CBA with the BMDA arguably
incorporates the Plan documents.
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incorporated into the CBAs. It merely held that the Plan documents
"are arguably a part of the CBAs," and that "they arguably give the
[Company] the authority to effect the merger." Bath Iron Works
Corp., 345 N.L.R.B. No. 33, at 5.
The determination of an unfair labor practice charge may
become more difficult when certain terms and conditions of
employment, such as the specific terms of the Plan, are described
in documents other than the CBA itself. Of course, if the CBA
expressly states that those other documents are "incorporated in
the agreement," that suffices to include those documents in the
analysis. Mary Thompson Hosp., 296 N.L.R.B. 1245, 1246-47 (1989),
enforced, 943 F.2d 741 (7th Cir. 1991).
We agree with the Board majority, however, that, at least
under the sound arguable basis standard, the ALJ and the dissent
from the Board's opinion were incorrect to insist on some
particular incantation of words.9 See Bath Iron Works Corp., 345
N.L.R.B. No. 33, at 5. The fact that none of the contracts here
use the term "incorporate" does not mean the Plan documents are not
sufficiently part of the contracts to be considered in the sound
arguable basis analysis. To the extent the Board seems to have
adopted a test that the agreements must simply "refer[] in some way
9
We express no opinion about what might be required under the
clear and unmistakable waiver standard.
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to the Plan documents," id. at 2, we disagree. Mere reference may
well not be sufficient.
Here, we are persuaded that the Plan documents are
sufficiently a part of the S-6 and S-7 CBAs, whether they are
explicitly incorporated or not, to be considered in the sound
arguable basis test. We examine de novo the terms of the
particular agreements, since this is a matter of contract
interpretation. See Litton, 501 U.S. at 202. Neither the S-6 nor
the S-7 CBA merely refers to the Plan documents. Rather than mere
reference, the S-6 CBA specifies that employee pension plans "are
ERISA Plans and their terms and conditions are governed by Plan
Documents." Similarly, the S-7 CBA states with respect to the
Plan, among other benefits, that "[a]ll of the terms and conditions
in their entirety are governed by Plan documents . . . ." This
language demonstrates that the parties negotiated over and reached
a bargain as to what documents governed the terms and conditions of
the Plan, and those documents were specifically identified in each
of the CBAs. The Company could thus arguably consider the Plan
documents a part of the CBA and rely on the documents as a basis
for authority to merge the Plan.
B. The Company's Interpretation of the S-6 and S-7 CBAs
We review de novo the question of whether the Company's
interpretation of the three CBAs has a sound arguable basis.
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Litton, 501 U.S. at 202. We conclude that the sound arguable basis
test has been met.
To the extent the Unions argue10 that the Plan documents
cannot arguably be read in conjunction with the S-6 and S-7 CBAs to
give the Company the authority to alter the Plan sponsor, the
Unions still cannot prevail.
The argument that the S-6 and S-7 agreements must be read
"to fix the 'terms and conditions' of the pension plan for the
duration of the agreement[s]," Bath Iron Works Corp., 345 N.L.R.B.
No. 33, at 11 (Liebman, Member, dissenting), fails. To the
contrary, section 12.1 of the Plan reserves to the Company the
right to "amend, modify, or suspend the Plan," subject to any
limitations in the CBAs, of which there are none. The S-6 and S-7
CBAs otherwise explicitly do not exclude that power. It is a sound
and arguable interpretation of those CBAs that the Company had the
authority to unilaterally change the Plan sponsor, whether or not
the argument is correct. The dissenting Board Member's point that
such an interpretation would give the Unions "less protection
against unilateral changes than [they] would have enjoyed if the
agreement[s] had never referred to the [P]lan," id. (emphasis
10
It is not at all clear that they do. See United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to in
a perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived.").
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omitted), is hardly dispositive. Parties routinely make
concessions during bargaining.
C. The Company's Interpretation of the CBA with the BMDA
The CBA between the Company and the BMDA provides that
the Plan "shall remain in full force and effect in accordance with
the provisions thereof, providing, however, that changes thereto
may be made as provided in Article I of the [P]lan." The Unions
concede that the CBA arguably incorporates the Plan documents.
Article I of the Plan permits certain modifications to the Plan for
tax purposes. Article XII of the Plan states that "[s]ubject to
the applicable provisions of any collective bargaining agreement,
the Company shall have the right to amend, modify, or suspend the
Plan."
The Unions argue that the phrase "remain in full force
and effect" requires that the Company maintain the status quo and
make no changes. Not so. There is a sound arguable basis for the
Company's determination that the agreement gives it the power to
amend the Plan and requires bargaining only when it seeks to change
the benefit structure or the level of benefits conferred, neither
of which occurred here.
D. The Board's Determination of No Bad Faith
We give deference to the Board's determination, as to all
three contracts, that the Company did not act in bad faith. See
NLRB v. Hearst Publ'ns, Inc., 322 U.S. 111, 131 (1944) ("[T]he
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Board's determination . . . is to be accepted if it has 'warrant in
the record' and a reasonable basis in law."), overruled in part on
other grounds by Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318
(1992). We disagree with the analysis of the dissenting Member of
the Board that bad faith is necessarily shown because the employer
took the position, which is certainly arguable, that the contract
permitted it to make this change unilaterally. See Bath Iron Works
Corp., 345 N.L.R.B. No. 33, at 6, 10 (Liebman, Member, dissenting).
The Board's conclusion that the Company did not engage in
an unfair labor practice because it acted in good faith pursuant to
a sound arguable interpretation of the three contracts was
reasonable. There was no evidence to the contrary.
The Company urges us to hold that it did not modify the
contracts because it was given, clearly and unambiguously, the
authority to change the Plan sponsor. Like the Board, we decline
to go so far.
V.
For the reasons stated above, we affirm the Board's
decision dismissing the complaint below.
Affirmed.
"Concurring opinion follows"
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LYNCH, Circuit Judge, concurring in the judgment. I join
in the judgment of the majority opinion. I do not join Part III.B
or the associated discussions of the topic covered in that Part.
I write to explain my different approach on those issues. Although
the majority and I agree that this case is properly a § 8(d)
contract modification case, we disagree as to what that implies
about any separate § 8(a)(5) unilateral change claim. We agree
that the § 8(d) contract modification claim was properly handled by
the Board.
The peculiar difficulty created by this case is that the
Board stated in its opinion that this was a § 8(d) case because the
General Counsel had alleged only "unlawful modification of the
contracts within the meaning of Section 8(d)." Bath Iron Works
Corp., 345 N.L.R.B. No. 33, at 3. I agree with the majority that
it is not a fair reading of the record to say that the General
Counsel did not also plead a § 8(a)(5) failure to bargain claim.
Normally, if the Board has not directly addressed an
issue, we would remand to get the Board's determination -- here,
its determination, assuming both claims were raised, on whether
this was a § 8(d) case or a § 8(a)(5) case. I agree with the
majority's implicit conclusion that this would be a fruitless
exercise. This case is old, as well, and needs resolution.
The majority handles this problem by deciding on its own
what the law is on § 8(a)(5) claims to which an employer raises a
-29-
contractual defense. It justifies its own review of the § 8(a)(5)
issue on the ground that the Board has been inconsistent, and so,
it says, the court is entitled to engage in de novo review. Of
course, the Board may, and often has, changed its positions -- it
is permitted to do so provided it explains itself. See Nat'l Cable
& Telecomms. Ass'n v. Brand X Internet Servs., 125 S. Ct. 2688,
2699-700 (2005) (stating that under Chevron, an agency should have
flexibility to vary its interpretation of a statute over time). I
do not think that de novo review can be justified. I also do not
think there has been material inconsistency on the part of the
Board.11 Nor do I think there is any need to get into a discussion
11
In describing a supposed inconsistency in the Board's treatment
of § 8(a)(5) unilateral change claims, the majority compares
§ 8(a)(5) unilateral change cases, in which the Board has applied
the clear and unmistakable waiver analysis, with a § 8(d) contract
modification case, in which the Board applied the sound arguable
basis analysis. NCR Corp., which the majority cites in support of
the proposition that "[a]t times, . . . the Board has determined,
without much explanation, that the dispute was solely one of
contract interpretation," was a § 8(d) contract modification case,
identified as such, not a § 8(a)(5) unilateral change case.
In NCR Corp., the union did allege a § 8(a)(5) unilateral
change violation, 271 N.L.R.B. 1212, 1213-14, but the ALJ explained
that on the facts of the case, the proper claim was a § 8(d)
contract modification claim, id. at 1217-18. The ALJ then analyzed
the claim as a § 8(d) contract modification claim (without applying
the sound arguable basis test), id. at 1218-19, and, finding a
violation, awarded remedies applicable to contract modification
claims, id. at 1219. The Board reversed the ALJ's decision on the
merits, applying the sound arguable basis test and concluding that
it "[did] not find that the [employer] failed to comply with
Section 8(d)." Id. at 1213. The Board made no mention of the
ALJ's determination that a § 8(d) contract modification claim was
the appropriate claim on the facts of the case, and it affirmed the
ALJ's rulings, findings, and conclusions that were consistent with
its decision. Id.
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of § 8(a)(5) cases at all, since this is not one, or into the
dispute between the D.C. Circuit and the Board over the treatment
of certain § 8(a)(5) claims, much less take any position on the
matter.
In my opinion, while the Board was wrong to say that no
§ 8(a)(5) claim had ever been pled (if that is in fact what the
Board meant), that is immaterial. The Board is not bound by the
theories pled by the General Counsel. In explaining at some length
the categorical differences between § 8(d) contract modification
cases and § 8(a)(5) unilateral change cases, the Board gave a
sufficient justification for why this case is properly
characterized only as a § 8(d) case. See Bath Iron Works Corp.,
345 N.L.R.B. No. 33, at 3. We are required under Chevron to give
deference to the policy choices inherent in that decision by the
Board. See Chevron U.S.A., Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 843 (1984).
The problem posed here is sui generis. It is regrettable
that the Board did not acknowledge the nature of the claims before
it and posed this dilemma for the courts.
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Bath Marine Draftsmen's Ass'n v. National Labor Relations Board
Court: Court of Appeals for the First Circuit
Date filed: 2007-01-29
Citations: 475 F.3d 14
Copy Citations