New Process Steel, L.P. v. NLRB ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 08-3517, 08-3518, 08-3709 & 08-3859
N EW P ROCESS S TEEL, L.P.,
Petitioner/Cross-Respondent,
v.
N ATIONAL L ABOR R ELATIONS B OARD ,
Respondent/Cross-Petitioner.
On Petition for Review of an Order of
the National Labor Relations Board.
A RGUED A PRIL 10, 2009—D ECIDED M AY 1, 2009
Before B AUER, F LAUM, and E VANS, Circuit Judges.
F LAUM, Circuit Judge. After negotiating a new collective
bargaining agreement with New Process Steel, the
owner of a plant in Butler, Indiana, the union representing
the employees of that plant took the agreement back to
its members. A majority of the union members voted
against accepting the contract, which contained substan-
tial take-aways, but an insufficient number voted to
2 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
strike. So, according to its rules, the union had to accept the
contract. New Process then refused to recognize the
contract, claiming that in negotiations they had insisted on
“ratification” and that the agreement was several votes
short of a majority (and thus unratified). The union’s
members, unhappy about accepting the contract, then
petitioned to decertify the union as their exclusive bar-
gaining representative, and New Process withdrew
recognition from the union. The union responded by
filing unfair labor practices claims with the NLRB for the
company’s failure to recognize the collective bargaining
agreement and deal with the union as the exclusive
representative of the plant’s employees, and prevailed
before the ALJ and the Board. The company now
petitions this court, asking us to find that the agreement
was invalid, and the NLRB cross-petitions for an order
enforcing its decisions.
For the following reasons, we affirm the NLRB’s deci-
sions and enter judgment enforcing its orders in full.
I. Background
New Process Steel (New Process or the company)
operates four steel processing facilities in the United States,
and one in Mexico. In September 2006, the company
needed to negotiate a collective bargaining agreement
with the employees at its facility in Butler, Indiana. The
International Association of Machinists and Aerospace
Workers, AFL-CIO, was certified as the exclusive bargain-
ing representative of those employees. On or around
September 6, 2006, the two sides sat down to begin negotia-
tions. The company was represented by an attorney,
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 3
Mike Oesterle, and the plant manager in Butler, Steve
Hartz. The record does not reveal who initially led negotia-
tions for the union, but in April 2007 Joseph Chaszar took
over as the bargaining representative for the union, and
he saw the negotiations through to the end.
The parties met approximately twenty-five times during
the course of negotiations, which ran from September 2006
to August 2007, and the company ultimately made about
forty-six written counter-proposals. As they agreed on
terms, the parties had a practice of signing or initialing
tentative agreements, known as “TA’ing” a provision. On
August 9, 2007, the parties completed their negotiation on
the last substantive term, and Chaszar signed the final
provision. Chaszar then told the negotiators, “I will agree
to your entire proposal” and signed the proposal in its
entirety. Chaszar then slid the proposal over to Oesterle,
who refused to sign. One of the union representatives
angrily demanded, “you [expletive] TA’ed everything else,
why don’t you sign off on this so we can get out of here?”
Chaszar also asked why the company’s representatives
refused to sign, given that the parties had previously
signed off on all proposals that they had agreed to.
Oesterle told the union negotiators that once the
contract was ratified the company would sign it. Chaszar
said he wanted to hold a union vote that day, but the
company insisted that they had production scheduled
and the union would “have to do it on your own time.” 1
1
New Process’ representatives explained that they insisted on
union ratification because they had heard grumbling about the
(continued...)
4 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
Chaszar scheduled the vote that weekend.
The administrative law judge found that this was the
only time the parties verbally discussed the idea of ratify-
ing the contract, and this discussion did not include the
form that union ratification should take. The parties had
exchanged written documents referencing the idea three
times, however. One of those exchanges was in the final
proposal: a condition that the wage agreement went into
effect “[b]eginning the effective date of this agreement, or
on the date the total Agreement is properly ratified, signed
and executed, whichever is later. . . .” The employer’s
initial set of bargaining proposals from October 2006 also
provided that, “[i]t is the company’s position that these
agreements will not become contractually effective until
the day and date that a total agreement on all parts of the
contract is reached, ratified, and signed by the parties.”
Finally, in a letter from July 2007 that Oesterle wrote
summarizing the progress of negotiations, he again
stated that, [t]he company proposes a one-year deal,
effective the date the contract is signed, executed, and
ratified, whichever is later.” However, the letter listed
this as an “open” proposal, meaning it was one that the
company had offered but that the union had not yet
accepted.
1
(...continued)
union among employees. Hartz told the ALJ that, “There was
a lot of talk in the shop about [ ] decertifying . . . and . . . this
contract had a lot of take-aways and . . . [New Process
wanted] to make sure they had an opportunity to, you know,
voice their opinion, and vote for the contract and let their
voice be heard.”
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 5
The union held its vote on Sunday, August 12 at a local
hotel, with about twenty-three employees in attendance
(the Butler facility had approximately thirty-two em-
ployees total). Cheszar started the vote by explaining how
the process would work. First, the employees would vote
on the contract. If a majority of the employees did not vote
to approve the contract, the union would then take a
vote to strike. Union by-laws required a two-thirds vote
in order to strike. If the employees did not vote to
approve the contract but also did not pass a strike resolu-
tion, the union would accept the contract. This procedure,
which Cheszar explained at the beginning and end of the
meeting, is contained in a printed union circular. The
rule has a simple rationale: IAM believes that if em-
ployees vote not to accept a contract but also do not pass
a resolution to strike for better terms, the union
negotiators lack the necessary leverage to negotiate a
more favorable agreement and must accept the
contract proposal that they have in hand.
After Chaszar outlined the terms, the union conducted
a secret ballot vote on the contract. The employees
rejected the proposal by a margin of about one or two
votes. Chaszar then explained that they were going to
take a strike vote, and that a two-thirds majority was
needed for that resolution to pass. The strike resolution
failed. The union representatives told the employees that
the contract was enacted, because the union did not
have enough votes to go on strike. Chaszar called New
Process later that day and told them they had an agree-
ment. New Process’ representatives then executed the
collective bargaining agreement.
6 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
A few days later, Hartz called New Process’ CEO at the
corporate headquarters in Houston and told him about
some employee complaints he had received regarding
the manner in which the union accepted the contract. On
September 11, 2007, New Process’ outside legal counsel
sent Cheszar a letter stating that the company was resum-
ing negotiations and did not accept the latest agreement
because it had not been ratified by a majority vote. “Since
ratification was an express precondition to the agree-
ment,” the letter concluded, “it is clear that there is not
nor has there ever been a contract between the company
and the union.” The company informed the union the
next day, September 12, that it had received a decertifica-
tion petition from the employees of the Butler facility
and was withdrawing its recognition from the union as a
result.
The IAM then filed an unfair labor practices charge with
the National Labor Relations Board (NLRB or Board) on
September 17, 2007, and the general counsel of the NLRB
issued a complaint based on that charge. The NLRB alleged
that New Process violated § 8(a)(1) and (5) of the
National Labor Relations Act by wrongfully repudiating
a valid collective bargaining agreement, and § 8(a)(1) and
(5) and § 2(6) and (7) of the NLRA by withdrawing recogni-
tion from the union. New Process filed an answer denying
all of the allegations. The matter was tried before an
Administrative Law Judge who issued findings of fact
and conclusions of law with respect to the complaint,
ruling that the ratification-by-majority-vote provision
that New Process insisted was a condition of the agree-
ment had not been agreed on by both parties and that
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 7
New Process lacked standing to raise other complaints
about the ratification process that the union employed.
New Process then appealed the decision of the admin-
istrative law judge to the NLRB. The Board adopted the
ALJ’s findings and conclusions. In a separate decision, the
Board also ordered New Process to cease and desist from
its refusal to deal with IAM as the bargaining representa-
tive of its employees. The NLRB concluded that New
Process and IAM had enacted a valid collective bar-
gaining agreement and that the union enjoyed “a conclu-
sive presumption of majority status” during the term of
a collective bargaining agreement. New Process sought
review of the NLRB’s decisions in this court, and the
Board petitioned for orders enforcing its judgment. Those
cases are consolidated in this appeal.
II. Discussion
This court applies a circumscribed standard of review to
rulings of the NLRB. SCA Tissue North America LLC v.
NLRB, 371 F.3d 983, 987 (7th Cir. 2004). We review its
factual findings for substantial evidence and its legal
rulings for a reasonable basis in law. Sears, Roebuck & Co. v.
NLRB, 349 F.3d 493, 502 (7th Cir. 2003). Substantial evi-
dence means “such relevant evidence as a reasonable
mind might accept as adequate to support the conclusion
of the Board.” Huck Store Fixture Co. v. NLRB, 327 F.3d
528, 533 (7th Cir. 2003). Under the substantial evidence
test, a reviewing court may not “displace the Board’s
choice between two fairly conflicting views, even though
the court would justifiably have made a different choice
8 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
had the matter been before it de novo.” Universal Camera v.
NLRB, 340 U.S. 474, 488 (1951); see also NLRB v. Nevada
Consolidated Copper Corp., 316 U.S. 105, 106 (“If the
findings of the Board are supported by evidence the
courts are not free to set them aside, even though the
Board could have drawn different inferences.”). When
the board adopts an ALJ’s findings of fact and conclu-
sions of law, as it did here, we review those determina-
tions. Sears, Roebuck, 349 F.3d at 508.
A. NLRB’s jurisdiction
New Process’ first objection to the NLRB’s orders is that
it lacks authority to issue them in the first place. A little
background information is needed for this argument. The
NLRB, by statute, consists of five members. Those mem-
bers are appointed by the President with the advice and
consent of the Senate and serve staggered five year
terms. 29 U.S.C. § 153(a). Also by statute, the NLRB is
allowed to delegate the authority of the five member
body to smaller, three member panels. This delegation
process was spelled in § 3(b) of the NLRA:
The Board is authorized to delegate to any group of
three or more members any or all of the powers
which it may itself exercise . . . A vacancy in the
Board shall not impair the right of the remaining
members to exercise all of the powers of the Board, and
three members of the Board shall, at all times, consti-
tute a quorum of the Board, except that two members
shall constitute a quorum of any group designated
pursuant to the first sentence hereof.
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 9
29 U.S.C. § 153(b). On December 28, 2007, with one seat
already vacant and another member’s term about to
expire, the four members of the Board delegated all of its
authority to a three member panel. When the recess
appointment of one member of that group of three
expired three days later, the remaining two members
proceeded as a quorum. As of January 2009, the NLRB
had issued over 300 opinions, both published and unpub-
lished, through this two-member quorum. New Process
alleges that this delegation procedure violates both the
plain meaning of § 3(b) of the NLRA and the purpose
of that act as embodied in the relevant legislative history
because it was in fact a delegation to a two-member
panel rather than a three-member panel.
We begin with the plain meaning of the statute. New
Process claims that the Board’s delegation was improper
in the first instance. The third member, whose term was
about to expire, was in New Process’ view a phantom
member who would not actually consider the cases
before the Board. New Process claims that this procedure
violated the plain meaning of the first sentence of the act
because it is not a delegation to “three or more” members
of the NLRB, but only to two members. The upshot of
New Process’ view, as their counsel explained at oral
argument, is that the first sentence of § 3(b) restricts the
Board from acting when its membership falls below three.
The NLRB argues that the statute at issue is clear that
the vacancy of one member of a three member panel does
not impede the right of the remaining two members to
execute the full delegated powers of the NLRB. As the
10 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
NLRB delegated its full powers to a group of three Board
members, the two remaining Board members can proceed
as a quorum despite the subsequent vacancy. This indeed
is the plain meaning of the text. As we read it, § 3(b)
accomplished two things: first, it gave the Board the
power to delegate its authority to a group of three mem-
bers, and second, it allowed the Board to continue to
conduct business with a quorum of three members but
expressly provides that two members of the Board con-
stitutes a quorum where the Board has delegated its
authority to a group of three members. 2 The plain
meaning of the statute thus supports the NLRB’s delega-
tion procedure.
This reading is also in line with the two other circuit
courts to consider this issue. Because the NLRB has been
issuing decisions through a two-member quorum since
2007, the issue is pending in several circuits at this time.3
2
Contrary to New Process’ assertions, this reading does not
deprive the first sentence of the section of its meaning. The first
sentence establishes a requirement for delegation in the first
instance, while the vacancy and quorum provisions allow the
Board to proceed in the event that the terms of Board members
subsequently expire. New Process’ reading, on the other hand,
appears to sap the quorum provision of any meaning, because
it would prohibit a properly constituted panel of three
members from proceeding with a quorum of two.
3
The D.C. Circuit heard oral argument on this issue in Laurel
Baye Healthcare of Lake Lanier, Inc. v. NLRB, Nos. 08-1162, 08-1214,
while the Second and Eighth Circuits have pending cases
(continued...)
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 11
The First Circuit is so far the only one to address the
issue in a published opinion. In Northeastern Land Services
v. NLRB, No. 08-1878 (1st Cir. Mar. 13, 2009), the court
held that, “[t]he Board’s delegation of its institutional
power to a panel that ultimately consisted of a two-mem-
ber quorum because of a vacancy was lawful under the
plain text of section 3(b).” Slip op. at 11. As the First Circuit
pointed out, this result is also consistent with an Office
of Legal Counsel memorandum concluding that, “In our
view, if the Board delegated all of its powers to a group
of three members, that group could continue to issue
decisions and orders as long as a quorum of two members
remained.” Quorum Requirements, Memorandum from
M. Edward Whelan III, Principal Deputy Assistant Attor-
ney Gen., Office of Legal Counsel, (Mar 4. 2003), available
at 2003 WL 24166831.
In a case decided well before the current vacancies, the
Ninth Circuit upheld the NLRB’s ability to act in panels of
two if there is a resignation or vacancy in a properly
constituted panel of three. Photo-Sonics Inc. v. NLRB, 678
F.2d 121 (9th Cir. 1982). The petitioner in Photo-Sonics
argued that the order in that case was invalid because
one member of the panel of three left the Board prior to
the release of the decision. Id. at 122. The Ninth Circuit
rejected that argument, holding that under § 3(b) two
members was a quorum and that courts had interpreted
3
(...continued)
raising the same issue. Snell Island SNF v. NLRB, No. 08-3822, 08-
4336 (2nd Cir.); NLRB v. Whitesell Corp., No. 08-3291 (8th Cir.).
12 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
quorum as “the number of the members of the court as
may legally transact judicial business.” Id. (quotation
omitted). New Process attempts to distinguish Photo-
Sonics by arguing that the third Board member in that
case participated in the underlying decision, while in this
case the decision was made by a panel of two. By its terms,
however, § 3(b) contains no requirement about whether a
vacant Board member needs to have heard evidence or
participated in a decision in order for the quorum re-
quirement to apply. As long as the panel consisted of
three NLRB members at the time it was constituted, Photo-
Sonics is persuasive authority endorsing the NLRB’s
reading of the statute.
When the plain meaning of a statute is unambiguous, we
need not consider a statute’s legislative history or analo-
gous cases in order to interpret it. See United States v. Easter,
553 F.3d 519, 526 (7th Cir. 2009) (“Where, as here, the
plain meaning of the statute is unambiguous, that is the
end of the matter.”). However, we also take time to note
that the legislative history behind § 3(b) does not support
New Process’ reading of the statute. § 3(b) of the NLRA
was amended by the Taft-Hartley Act, which expanded
the size of the NLRB from three members to five. The Taft-
Hartley Act itself was a compromise between competing
House and Senate revisions of the original National
Labor Relations Act. The House version created a Labor-
Management Relations Board of three members whose
sole duty was to decide cases. H.R. Rep. No. 80-245, at 25
(1947). The Senate version expanded the size of the
NLRB from three members to seven but included the
delegation and quorum provisions. S. Rep. 80-105, at 19
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 13
(1947). The eventual bill, which expanded the NLRB to
five members, was a compromise between the two ver-
sions.
New Process insists that the Taft-Hartley revisions
were designed to make the NLRB function more like a
court of appeals and to bring a greater variety of opinions
into the review of administrative decisions. It is true that
the Congressional framers of the Taft-Hartley Act were
concerned with the quality of the adjudicative work of the
Board, but their primary concern was increasing the
efficiency of the Board.4 “There is no field in which time
is more important, yet the Board is from 12 to 18 months
behind in its docket. . . . The expansion of the Board from
three to seven members, which this bill proposes, would
permit it to operate in panels of three, thereby increasing
by 100 percent its ability to dispose of cases expeditiously
in the final stage. . . .” S. Rep. No. 80-105, at 8 (1947). The
purpose of the revisions, then, was to allow the NLRB
to hear more cases by creating panels of the entire
4
The House’s report on the proposed bill clearly expressed
misgivings with the construction of the Board under the
Wagner Act, arguing that, “[a]cting as prosecutor, judge, and
jury, and to all intents and purposes its own Supreme Court
insofar as its findings of fact are concerned, the Board seems to
have found the temptation to be arrogant, arbitrary, and unfair
irresistible.” H.R. Rep. No. 80-245, at 25 (1947). Congress saw
the remedy to this problem in structural changes to the Board,
however, such as abolishing the Review Division. Id. The
House Report did not even mention any vacancy or quorum
provisions in its discussion of the proposed changes to § 3. Id.
14 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
Board. There is no suggestion in the relevant reports that
the Board is restricted from acting when its membership
falls below a certain level, as New Process would have it.
Indeed, a court interpreting the statute that way would
hinder the efficient panel operation that Congress
intended to create. See also Hall-Brooke Hospital v. NLRB,
645 F.2d 158, 162 n.6 (2d Cir. 1981) (“Congress added
[§ 3(b)] to the NLRA to enable the Board to handle an
increasing caseload more efficiently.”).
To find support for its reading of the statute in the
legislative history, New Process would need statements
establishing that the Board was forbidden from operating
with a quorum of two, or that Congress was particularly
concerned about delegating authority to Board members
whose term was about to expire. They have produced
nothing to that effect. To the extent that the legislative
history points either way in this case, then, it establishes
that Taft-Hartley created a Board that functioned as
an adjudicative body that was allowed to operate in
panels in order to work more efficiently. Forbidding the
NLRB to sit with a quorum of two when there are two or
more vacancies on the Board would thus frustrate the
purposes of the act, not further it.
Finally, New Process argues that the NLRB’s delegation
process is invalid because the Supreme Court has disap-
proved of similar “quorum” procedures in analogous
situations. They rely on the Supreme Court’s decision in
Nguyen v. United States, 539 U.S. 69 (2003), which held that
a circuit court of appeals could not operate with a panel of
two Article III judges and a third Article IV judge. The
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 15
statute at issue in Nguyen, 28 U.S.C. § 46, requires “the
hearing and determination of cases and controversies by
separate panels, each consisting of three judges.” 28 U.S.C.
§ 46(b). The Court held that a panel consisting of fewer
than three judges was not a properly constituted panel
even if two Article III judges constituted a quorum of a
panel of three.
There are two ways to distinguish Nguyen from the
present case. First, 28 U.S.C. § 46 contains no delegation or
quorum clauses, simply a requirement that panels consist
of three judges. Second, the Court in Nguyen found while
examining the legislative history that Congress amended
28 U.S.C. § 46 in part because of concerns about circuits
routinely assigning cases to panels of two. Nguyen, 539
U.S. at 83. But § 3(b) was not motivated by similar con-
cerns, and indeed contains quorum and delegation
clauses that cover the scenario at issue here.
Additionally, a number of administrative law opinions
hold that a public board has the authority to act despite
vacancies because the board, rather than the individual
members, has the authority to act, a principle that
suggests the NLRB has the authority to act so long as
they have satisfied the quorum requirements. See, e.g., FTC
v. Flotill Prods., Inc., 389 U.S. 179, 183-86 (1967) (common
law quorum rules apply to public bodies). This principle
is borne out in other court decisions allowing admin-
istrative agencies to operate with a quorum of remaining
members. See Falcon Trading Group, Ltd. v. SEC, 102 F.3d
579, 582 (D.C. Cir. 1996) (SEC allowed to create quorum
rules permitting the commission to operate with only
16 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
two of five members); Railroad Yardmasters of Am. v.
Harris, 721 F.2d 1332, 1335 (D.C. Cir. 1983) (National
Mediation Board allowed to operate with only one of
three members).
We ruled on a similar issue in Assure Competitive Transp.
Inc. v. United States, 629 F.2d 467, 473 (7th Cir. 1980). Assure
concerned the Interstate Commerce Commission, which
by statute has eleven members but, because of vacancies,
had dwindled to six members by the late 1970s. The ICC
asked Congress to amend the statutory language of its
quorum rules to allow the commission to act with a
quorum of the remaining commissioners rather than with
a quorum of the entire number of seats on the board. Id. at
474. This court held that the quorum rules permitted the
ICC to act with fewer than the full complement of the six
remaining board members, so long as a quorum of the
current board was present. Id. New Process argues that
this actually undercuts NLRB’s position, because the ICC
went to Congress for permission to act with a quorum
of the remaining board, which the NLRB did not do. This
argument presumes, however, that the NLRB is acting
outside of its statutory authority or that, in other words,
we accepted New Process’ plain meaning argument. Given
that the plain meaning of the statute supports NLRB’s
reading of the statute, New Process’ interpretation of
Assure is unpersuasive.
We thus find that the NLRB had authority to hear the
labor dispute in this case and to issue orders regarding
the unfair labor practices claim and New Process’ with-
drawal of recognition from the union, and proceed to
the merits of the case.
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 17
B. Validity of the collective bargaining agreement
New Process’ argument on the merits consists of two
claims. First, they argue that because ratification of the
contract was a condition precedent to implementation of
the agreement, the agreement between New Process and
the union was never final. Second, they argue that if the
union believed that the phrase “ratification” did not mean
a straight up-or-down vote by the union’s members that
there was no “meeting of the minds” between the union
and New Process and thus no valid agreement.
1. Meaning of “ratification”
The ALJ rejected New Process’ argument that there was
never a valid contract between New Process because the
union never “ratified” the contract according to the terms
of the parties’ agreement. The ALJ found that the three
references to “ratification” during the course of the negoti-
ations were cursory and did not include an agreement
on the procedure or method for ratification. In the
absence of such an agreement, the ALJ determined that
the IAM was allowed to select its own method of ratifica-
tion and that New Process did not have standing to
object to that method.
The NLRB has traditionally insisted that the method of
ratification a union chooses to employ is a matter between
the union and its members and not something the com-
pany can question. See Childers Products Co., 276 NLRB
709, 711 (1985) (“the method of ratification was within
the [u]nion’s exclusive domain and control . . .”); see also
18 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
Valley Central Emergency Veterinary Hospital, 349 NLRB
1126, 1127 (2007) (“Board law is clear that [employer] has
no standing to challenge [the union’s] ratification pro-
cess.”). Nor is a company allowed to challenge whether
a union properly followed its own internal ratification
procedures. The litigants with standing to make that
challenge are the members of the union themselves, not
their employer. See Martin J. Barry Co., 241 NLRB 1011, 1013
(1979). The reason that the union is given such wide
latitude is concern for union independence. Federal labor
law has a general policy forbidding employers to place
conditions on how a union structures its internal relations
with its own members, lest a company subvert the
union and create a structure whereby it deals with em-
ployees directly. See NLRB v. Wooster Div. of Borg-Warner
Corp., 356 U.S. 342, 350 (1958).
New Process now argues that the ALJ’s decision was
inconsistent with prior decisions from the NLRB, in
particular Beatrice/Hunt-Wesson, Inc., 302 NLRB 224 (1991)
and Hertz Corporation, 304 NLRB 469 (1991). In Beatrice,
the Board dismissed similar allegations against an em-
ployer who refused to recognize a collective bargaining
agreement. During negotiations over that agreement, the
parties explicitly agreed that the contract would have to
be ratified by the members of the bargaining unit (as
opposed to just the members of the union, a key differ-
ence) and set this agreement down in a memorandum.
Beatrice, 302 NLRB at 224. The bargaining unit employees
repeatedly rejected the contract until the union obtained
what it took to be sufficient ratification from the
members of the union itself, although the “ratification”
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 19
was actually the vote of a single individual. Id. The
NLRB held that when the parties have agreed on a
method and process for ratification, an employer can
rightly insist that the method be followed before it recog-
nizes the collective bargaining agreement. Id. at 225. In
Hertz, a union and an employer expressly agreed that a
tentative collective bargaining agreement was not effec-
tive until it was ratified. Hertz, 304 NLRB at 472. The
union, however, never held a ratification vote on the
agreement. Id. at 471. The Board held that an employer’s
refusal to recognize the agreement was not an unfair
labor practice where the parties agreed upon ratification
as a condition precedent and the union failed to satisfy
that condition. Id. at 469.
New Process does not contend that the discussions
produced an agreement defining “ratification,” but they
claim that the term is well-established within labor rela-
tions negotiations, and means a straight up-or-down
vote by members of the union. The ALJ and the Board,
however, did not agree that the meaning of the term is
so obvious nor that it has a prevailing meaning. They
found that New Process’ definition is not unreasonable,
but that it is “contrary to the way the IAM and other
unions proceed.” Indeed, other decisions from the NLRB
refer to similar multi-step ratification methods. See
Childers Products Co., 276 NLRB at 711.
The factual finding here is supported by substantial
evidence. The record reflects that three counter-proposals
20 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
from New Process referred to “ratification.” 5 None of those
counter-proposals, however, referred to a method of
ratification. New Process only discussed its desire to
make ratification a condition precedent after the parties
completed negotiation, and there the discussion was
about ratification, full stop, with no discussion of process
or method. New Process argues that Chaszar, in his
deposition testimony, admitted that he understood
“ratification” to mean a majority vote on the contract
and that this condition was not satisfied. However, the
phrase he was actually asked about was “a vote,” which
he took to mean majority rule. With respect to ratifica-
tion, Chaszar testified that he meant “how we process
our ratification,” and that, “[i]f it was a positive vote, we
had an agreement. If it was a negative vote, we go to the
second vote,” although he did say that he did not go over
this process with the company’s representatives. That is
not clearly committing to New Process’ preferred ratifica-
tion method. Nor would a union negotiator’s tacit under-
standing necessarily be binding when the union already
has a method for ratifying contract proposals.
The Board’s conclusion that New Process cannot refuse
to recognize the contract because the union did not
follow the company’s definition of ratification also has a
reasonable basis in law. Long-standing precedents provide
a basis for the Board’s ruling that New Process cannot
5
Those three counter-proposals were in New Process’ opening
bargaining proposal in 2006, on page eighteen of its July 2007
letter summarizing bargaining, and the wage provision of the
tentative agreement.
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 21
insist on any particular method of ratification. See, e.g.,
Childers Products Co., 276 NLRB at 711. New Process argues
throughout their brief that the Board has essentially
overruled Beatrice and Hertz and thus acted arbitrarily.
An agency of course has a “duty to explain its departure
from prior norms,” Atchison, T.&S. F. R. Co. v. Wichita
Board of Trade, 412 U.S. 800, 808 (1973), but the ALJ’s
decision below contains a long discussion of the meaning
of Beatrice and Hertz and distinguishes them from the
present case. New Process relies heavily on a line from a
concurring opinion in Beatrice, stating that “[i]f indeed
the parties have made employee ratification a part of the
bargain, it is altogether appropriate that the Board give
a measure of protection to the expectancy interests of the
parties.” Beatrice, 302 NLRB at 227 (Chairman Stephens,
concurring). We agree with the Board and the ALJ, how-
ever, that this case did not involve an express agreement
on a method of ratification, as Beatrice did, and that the
union satisfied the ratification condition by following
its two-step procedure.6 In the absence of an express
agreement otherwise, the ratification procedure was a
matter within the union’s control.
6
New Process also argues that the IAM did not follow the
ratification procedure; the union’s circular requires the union
to hold two strike votes, at the beginning and end of the vote
on accepting the contract, while the union only held one. New
Process, however, does not have standing to raise this claim,
as it is a matter between the union and its members. Martin J.
Barry Co., 241 NLRB at 1013. New Process certainly does not
claim an express bilateral agreement that the union would
follow that ratification procedure.
22 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
2. No “meeting of the minds”
New Process argues in the alternative that there was
simply no agreement between the company and the
union: New Process meant ratification to mean an up or
down vote and the IAM apparently meant a different
process, and because of this disparity there was no
meeting of the minds and thus no contract. The Board
argues that a party’s subjective understanding of a term
cannot prevent a “meeting of the minds” because in
federal labor law, as in common law, an agreement is
judged by conduct evidencing an agreement rather than a
party’s subjective belief. See MK-Ferguson Co., 296 NLRB
776 n.2. As the Board argues to this court, if New
Process wanted a straight up-or-down vote, it should
have asked for one.
New Process, of course, claims that it did just that
when it asked for ratification. The company has difficulty
finding evidentiary support for that claim, however. The
ALJ discredited Hartz’s claim that his “unexpressed
understanding” throughout negotiations was an up-or-
down ratification vote, and that credibility determination
removed much of the factual support from New Process’
claims about the meaning of ratification. Again, there is
substantial evidence in the record supporting the ALJ’s
finding that the parties did not negotiate a meaning of
“ratification” or a process for going about it, and the
legal conclusion that the union was free to employ its
own method of ratification is reasonable given the
Board’s precedents.
Nos. 08-3517, 08-3518, 08-3709 & 08-3859 23
We affirm the Board’s order finding that New Process
violated § 8(a)(1) and (5) of the NLRA by repudiating the
collective bargaining agreement.
C. Recognition of union
New Process also appeals from the Board’s order
forcing it to recognize the IAM as a valid collective bar-
gaining representative for employees in the Butler plant.
New Process withdrew recognition from the union on
September 12, 2007 because it had received an employee
decertification petition protesting what the employees
saw as excessive give-backs in the contract and an objec-
tionable ratification procedure. The Board determined
that the company could not withdraw recognition from
the union so long as a valid collective bargaining agree-
ment was in effect. The “contract bar” rule prevents an
employer from petitioning for decertification of a union
as an exclusive bargaining representative during the life
of a collective bargaining agreement, and one con-
sequence of that rule is that an employer cannot with-
draw recognition from the union, either. See Auciello Iron
Works v. NLRB, 517 U.S. 781, 785 (1996); see also NLRB v.
Dominick’s Finer Foods, Inc., 28 F.3d 678, 683 (7th Cir. 1994).
Because of the contract bar, this issue turns on the
validity of the collective bargaining agreement. If the
agreement was valid, then the contract bar prohibited
New Process from withdrawing recognition from the
union. If not, then the company was free to do so. Here,
since we affirm the Board’s determination that New
Process and the union entered into a valid one-year
24 Nos. 08-3517, 08-3518, 08-3709 & 08-3859
collective bargaining agreement in August 2007, we
affirm the Board’s determination that New Process wrong-
fully withdrew recognition from the union in Septem-
ber 2007.
III. Conclusion
For the foregoing reasons, we A FFIRM the decision of
the Board and enter judgment enforcing its orders in full.
5-1-09