Tramont Manufacturing, LLC v. NLRB , 890 F.3d 1114 ( 2018 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 5, 2018 Decided May 29, 2018
No. 17-1133
TRAMONT MANUFACTURING, LLC,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with 17-1147
On Petition for Review and Cross-Application
for Enforcement of an Order of
the National Labor Relations Board
Tony J. Renning argued the cause for petitioner. On the
briefs was Jenna E. Rousseau.
David A. Seid, Attorney, National Labor Relations Board,
argued the cause for respondent. With him on the brief were
John H. Ferguson, Associate General Counsel, Linda Dreeben,
Deputy Associate General Counsel, and Jill A. Griffin,
Supervisory Attorney.
2
Before: GARLAND, Chief Judge, and TATEL and MILLETT,
Circuit Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: Three years ago, the National Labor
Relations Board’s General Counsel filed a complaint against
petitioner Tramont Manufacturing, LLC, alleging that the
company had violated the National Labor Relations Act by
laying off twelve workers without first notifying its employees’
union or bargaining with the union over matters such as the
availability of severance pay or preferential rehiring. Although
unchallenged Board precedent holds that the Act typically
mandates bargaining over such layoff “effects,” Tramont
argued that a provision in an employee handbook that reserved
the company’s right to “implement” layoffs—a provision the
Board agrees Tramont lawfully adopted as an initial
employment term when it first hired the affected workers—
relieved it of this bargaining duty. The Board disagreed,
concluding that the handbook provision, silent as to effects,
should not be read to displace Tramont’s duty under the Act.
Tramont seeks review of this conclusion, as well as certain of
the Board’s factual and remedial determinations. Because we
agree with Tramont that the Board failed adequately to justify
the legal standard governing its interpretation of the handbook,
we remand for further explanation. In all other respects, we
deny the petition for review.
I.
Upon acquiring the assets of a bankrupt manufacturing
company in 2014, Tramont Manufacturing, LLC (“Tramont”),
agreed to rehire many of the company’s employees and
recognize their union, the United Electrical, Radio and
Machine Workers of America (the “Union”). Instead of
adopting the collective-bargaining agreement the Union had
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negotiated with the predecessor company, however, Tramont
opted to exercise the right afforded certain successor employers
under National Labor Relations Board v. Burns International
Security Services, Inc., 406 U.S. 272 (1972), to unilaterally set
the rehired workers’ initial terms and conditions of
employment pending the negotiation of a new collective-
bargaining agreement, see id. at 291 (holding that “the mere
fact that an employer is doing the same work in the same place
with the same employees as his predecessor” does not in and
of itself require the employer to “assume[] the obligations” of
its predecessor’s collective-bargaining contract). Tramont set
out these initial terms in an employee handbook containing a
section covering “Workforce Reductions (Layoffs).” Tramont
Manufacturing, LLC, Handbook: Employee Package and
Benefit Details § 5.5 (May 7, 2014) (Handbook), Joint
Appendix (J.A.) 126. This section—the only handbook
provision Tramont has put at issue in these proceedings—
provided that, “[f]rom time to time, management may decide
to implement a reduction in force” and went on to specify the
“procedures” by which Tramont would “select employees to be
retained” in the event of layoffs. Id. That section said nothing
about what benefits, if any, laid-off workers would receive.
The present dispute kicked off on February 9, 2015, when
Tramont, without first notifying the Union, issued layoff
notices to twelve employees. The president of the Union’s local
chapter (the “Local”), who learned of the layoffs because he
happened to be among the twelve, responded straightaway by
asking Human Resources for a list of laid-off employees, and
Tramont in turn provided a partial list by letter dated
February 25. Shortly thereafter, in response to a request from
the Union’s national representative, Tramont scheduled a
grievance meeting for March 30. At that meeting, the Union
representative requested—for the first time—bargaining over
the layoffs’ effects, including the workers’ rights and benefits,
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and asked that the workers be reinstated with back pay in the
interim. Tramont neither granted this request nor replied to a
later email repeating it.
In response, the Local filed two sets of charges against
Tramont with the National Labor Relations Board (the
“Board”), alleging that the company had committed unfair
labor practices in violation of the National Labor Relations Act
(the “Act”), 29 U.S.C. §§ 151–169; see id. § 158(a) (cataloging
such practices). The Board’s General Counsel declined to take
any enforcement action based on the first set of charges, which
challenged the layoffs, explaining that, as a successor employer
under the Supreme Court’s Burns decision, Tramont had
permissibly “set initial terms and conditions of employment at
the time it hired the predecessor company’s employees” and
that the layoff decisions complied with these terms. Letter from
Richard F. Griffin, Jr., General Counsel, NLRB, to Margot A.
Nikitas, Associate General Counsel, United Electrical, Radio
and Machine Workers of America 1 (Aug. 21, 2015), J.A. 175.
Setting the stage for the issues before us, however, the General
Counsel issued a complaint based on the second set of charges,
which challenged Tramont’s failure to notify the Union of the
layoffs or bargain over their effects. See Complaint and Notice
of Hearing, Tramont Manufacturing, LLC, No. 18-CA-155608
(NLRB Sept. 30, 2015).
Following a hearing on these charges, an administrative
law judge (ALJ) concluded that Tramont had violated the Act
by “fail[ing] to notify the Union of its decision to lay off
[twelve] employees,” and giving the Union no “meaningful
opportunity to bargain” over effects. Tramont Manufacturing,
LLC (Tramont I), 364 NLRB No. 5, at 6 (May 23, 2016).
Recognizing that layoff effects are a mandatory subject of
bargaining under Board precedent, see id. at 5 (citing Lapeer
Foundry & Machine, Inc., 289 N.L.R.B. 952, 954–55 (1988)), the
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ALJ rejected Tramont’s argument that the Union had waived
its rights by waiting until March 30 to request effects
bargaining, see id. at 6–7. In the ALJ’s view, Tramont
presented the Union “with a fait accompli” by failing to give
notice of the layoffs until after they had been implemented. Id.
at 6. Because the Union received no adequate opportunity to
invoke its bargaining rights in the first place, the ALJ
concluded, the timing of its eventual request was immaterial to
Tramont’s liability. Id. at 6–7.
The ALJ also rejected Tramont’s argument that the
handbook’s layoff provision relieved it of its bargaining
obligations. In doing so, the ALJ considered two distinct legal
standards. First, the “contract coverage” standard, adopted by
our court, provides that an employer need not bargain over any
subject covered by a collective-bargaining agreement because
that agreement represents the outcome of negotiations between
employer and union and so must be enforced in a way that
respects the bargain struck. Id. at 6 (citing NLRB v. United
States Postal Service, 8 F.3d 832, 836 (D.C. Cir. 1993)). The
ALJ found this standard inapplicable because “the parties did
not bargain” over the handbook terms. Id.
Second, observing that the Board has in any event long
eschewed this court’s contract-coverage standard, the ALJ
went on to apply the Board’s favored rule, which relieves an
employer of its bargaining duty only where a union has made a
“clear and unmistakable waiver” of its rights. Id. Because the
handbook provision on which Tramont relied was “silent about
notification regarding layoffs and the effects of the layoffs,”
the ALJ concluded that, under the waiver standard, the
provision did not relieve Tramont of its duty to bargain. Id.
The Board affirmed in all relevant respects, “[a]ssuming,
without deciding, [that] waiver analysis [was] applicable”
6
because, it believed, “[n]o party ha[d] argued that it was
improper for the [ALJ] to apply” the waiver standard. Id. at 1
n.1. Tramont then filed a petition for review in this court,
claiming among other things that it had in fact challenged the
ALJ’s decision to apply the waiver standard. When the Board
acknowledged that it had overlooked this argument, a panel of
this court remanded the case to the Board so that it could
“consider the issue.” Per Curiam Order, Tramont
Manufacturing, LLC v. NLRB, Nos. 16-1184, 16-1231 (D.C.
Cir. Feb. 21, 2017).
The Board then vacated its prior order and, “tak[ing] up
the case anew,” again affirmed the ALJ. Tramont
Manufacturing, LLC (Tramont II), 365 NLRB No. 59, at 1
(Apr. 7, 2017). In its new order, the Board concluded that the
handbook’s layoff provision gave Tramont no basis for
avoiding its obligation to bargain over effects under “either the
‘clear and unmistakable waiver’ standard . . . or the ‘contract
coverage’ standard.” Id. at 2. As for the contract-coverage
standard, the Board, like the ALJ, found “no judicial authority
for the proposition that [it] could apply” absent a bargained
agreement between employer and union. Id. Furthermore, the
Board continued, even if that standard did apply, the cited
handbook provision “[could not] be read to authorize
[Tramont] to refuse to bargain with the Union over the effects
of . . . layoffs” because the provision covered only the criteria
for selecting which workers to lay off. Id. As for the waiver
standard, the Board agreed with the ALJ that the handbook
provision contained no clear and unmistakable waiver of the
Union’s bargaining rights. See id.
Though reaching the same conclusion as it had in its prior,
vacated order, the Board imposed a slightly different remedy.
Whereas the original order had required Tramont to reimburse
the laid-off employees for their job-hunting and interim work-
7
related expenses only to the extent that those expenses
exceeded the affected workers’ interim earnings, see
Tramont I, 364 NLRB No. 5, at 1 n.2, the new order, relying
on intervening Board precedent, required the company to
reimburse these expenses irrespective of interim earnings, see
Tramont II, 365 NLRB No. 59, at 1 n.2.
With the Board’s original order vacated, this court
dismissed the petition for review of that order as moot. See
Clerk’s Order, Tramont Manufacturing, LLC v. NLRB, Nos.
16-1184, 16-1231 (D.C. Cir. May 15, 2017). Tramont then
initiated the present action by petitioning for review of the new
order, and the Board cross-applied for enforcement. Tramont
argues that the Board (1) improperly concluded that the
handbook’s layoff provision did not relieve Tramont of its duty
to bargain over effects, (2) erred in affirming the ALJ’s
findings that the Union neither received sufficient notice of the
layoffs nor waived its bargaining rights by failing to timely
invoke them, and (3) lacked authority to impose a remedy more
burdensome than the one imposed in its original order. We
consider these arguments in turn.
II.
We review the Board’s order under a “highly deferential
standard,” setting it aside “only if the Board ‘acted arbitrarily
or otherwise erred in applying established law to the facts at
issue, or if its findings are not supported by substantial
evidence.’” Waterbury Hotel Management, LLC v. NLRB, 314
F.3d 645, 650 (D.C. Cir. 2003) (quoting Plumbers & Pipe
Fitters Local Union No. 32 v. NLRB, 50 F.3d 29, 32 (D.C. Cir.
1995)); see also 29 U.S.C. §§ 160(e), (f) (directing that the
Board’s adequately supported factual findings be treated as
“conclusive”). That said, “[w]hile our review is deferential, we
will not ‘rubber-stamp [Board] decisions,’” Consolidated
Communications, Inc. v. NLRB, 837 F.3d 1, 7 (D.C. Cir. 2016)
8
(quoting Erie Brush & Manufacturing Corp. v. NLRB, 700 F.3d
17, 21 (D.C. Cir. 2012)), and we will remand where a Board
order “reflects a . . . lack of reasoned decisionmaking,” Penrod
v. NLRB, 203 F.3d 41, 46 (D.C. Cir. 2000).
A.
We begin with Tramont’s principal argument—that the
Board committed legal error by declining to read the
handbook’s layoff provision as displacing the statutory
obligation to bargain over layoff effects. As Tramont sees it,
the Board was obliged to apply this court’s contract-coverage
standard, relieving the company of any “duty to bargain” over
“subjects already covered by” that provision. United States
Postal Service, 8 F.3d at 836–37. And the provision “covers”
layoff effects, Tramont goes on, because it “specifically
addresses the right of management to ‘implement’ a reduction
in force.” Pet’r’s Br. 33 (emphasis omitted). Alternatively,
Tramont argues that even if the Board permissibly declined to
apply the contract-coverage standard, the challenged order was
nonetheless arbitrary because the Board offered no reasoned
justification for applying the waiver standard in its place.
We have no need to decide whether the handbook
provision covers layoff effects under a contract-coverage
standard because the Board’s decision not to apply that
standard fell “within [its] legitimate policy ambit in
interpreting the National Labor Relations Act.” Enloe Medical
Center v. NLRB, 433 F.3d 834, 837 (D.C. Cir. 2005). Our court
has explained that the contract-coverage standard rests on the
rationale that, once a union and an employer enter into a
collective-bargaining agreement, “the union has exercised its
bargaining right,” United States Postal Service, 8 F.3d at 836
(quoting Department of the Navy v. FLRA, 962 F.2d 48, 57
(D.C. Cir. 1992)), and that the extent to which the agreement
fixes the parties’ rights therefore presents a question of
9
“ordinary contract interpretation,” Enloe, 433 F.3d at 839. As
the Board aptly noted in the challenged order, however, this
rationale evaporates where, as here, the employer argues that
its bargaining duties have been displaced not by a bargained-
for contract, but instead by “a handbook provision” that it has
itself “unilaterally implemented . . . and to which the Union
ha[s] never agreed.” Tramont II, 365 NLRB No. 59, at 2.
Tramont cites no precedent—nor are we aware of any—
from this or any court applying the contract-coverage standard
when determining which subjects a Burns successor’s initial
terms and conditions remove from mandatory bargaining, let
alone any precedent holding that the Board must apply this
standard. Instead, Tramont asserts that “[t]his situation is no
different than one involving a current collective bargaining
agreement, or a situation where an employer must maintain the
status quo after expiration of a collective bargaining
agreement.” Reply Br. 9; see also Wilkes-Barre Hospital Co.
v. NLRB, 857 F.3d 364, 376–77 (D.C. Cir. 2017) (applying
contract-coverage standard to the terms of a collective-
bargaining agreement that had expired but that “continue[d] to
‘define the status quo’” between the parties, id. at 374 (quoting
Litton Financial Printing Division v. NLRB, 501 U.S. 190, 206
(1991))). This is wrong. Where a collective-bargaining
agreement—either operative or expired—is in play, the Board
must, in considering the agreement’s scope, take into account
the possibility that the union has chosen to “negotiate for a
contractual provision limiting [its] statutory rights.” Wilkes-
Barre, 857 F.3d at 376. But where, as here, an employer seeks
release from its statutory obligations on the basis of initial
employment terms it has itself drafted—terms that, indeed,
disclaim any “inten[t] to create contractual obligations with
respect to any matters [they] cover[],” Handbook § 12.1, J.A.
157—it would be perfectly reasonable for the Board to decide
as a policy matter to construe those terms under a standard
10
other than the one that would apply to the terms of a bargained-
for agreement.
Having rejected the contract-coverage standard, as it was
entitled to do, the Board went on to apply “the ‘clear and
unmistakable waiver’ standard, to which [it] adheres.”
Tramont II, 365 NLRB No. 59, at 2. Under that standard, “[a]
union may contractually relinquish a statutory bargaining right
if the relinquishment is expressed in clear and unmistakable
terms.” United Technologies Corp., 274 N.L.R.B. 504, 507
(1985). The Board, however, neglected to explain its basis for
applying this standard. Put simply, we do not see how
employment terms unilaterally imposed by an employer could
ever effect a waiver of bargaining rights by the union.
Whatever standard the Board decides should govern the
question of how far a Burns successor’s initial employment
terms displace the duty to bargain, framing that standard in
terms of waiver is far from intuitive; at the very least, it is a
choice that the Board must explain. See Point Park University
v. NLRB, 457 F.3d 42, 50 (D.C. Cir. 2006) (“Without a clear
presentation of the Board’s reasoning, it is not possible for us
to perform our assigned reviewing function . . . .”).
Tellingly, even now the Board makes no attempt to explain
how a waiver standard can sensibly apply to a Burns
successor’s unilaterally imposed initial employment terms.
Instead, it claims that Tramont forfeited any challenge to that
standard because it never “argued to the Board that[] it was
improper . . . to apply the clear-and-unmistakable-waiver
standard in the circumstances presented.” Resp’t’s Br. 26. The
record belies this claim. In its brief before the Board, Tramont
argued that “the question of ‘waiver’ normally does not come
into play with respect to subjects already addressed by the
terms and conditions governing employment.” Brief of
Respondent, Tramont Manufacturing, LLC in Support of
11
Exceptions to the Record and Proceedings at 15, Tramont
Manufacturing, LLC, No. 18-CA-155608 (NLRB Feb. 24,
2016) (citing United States Postal Service, 8 F.3d at 836–37).
Tramont could hardly have made this objection more explicit.
We shall therefore remand for the Board to explain its
decision to apply the waiver standard to the question of whether
a Burns successor’s initial terms and conditions of employment
relieve the employer of any given bargaining duty. On remand,
if the Board “find[s] itself unable to support” the use of that
standard, “it is, of course, free to [employ a] different one[].”
National Ass’n of Clean Water Agencies v. EPA, 734 F.3d
1115, 1161 n.5 (D.C. Cir. 2013). To be sure, even if the Board
chooses to abandon its waiver standard in this context, it might,
in its discretion, nonetheless decide that unilaterally imposed
employment terms should be narrowly construed and that
liability remains appropriate here. Should it do so, however, it
must respond to Tramont’s argument that such an outcome
would run counter to Monterey Newspapers, Inc., 334 N.L.R.B.
1019 (2001), in which the Board held that the Act imposed no
obligation on a Burns successor to bargain over “the rate of pay
it proposed in each job offer it made to each prospective new
employee” where the employer’s initial employment terms
established that new employees would be offered pay rates
within specified bands, id. at 1019. As we have explained,
where “the resemblance between the present case” and prior
cases is sufficiently strong, “it is incumbent upon the [Board]
to explain why the line of precedent either does not apply, or
why departure from that line is warranted in this case.” Lone
Mountain Processing, Inc. v. Secretary of Labor, 709 F.3d
1161, 1164 (D.C. Cir. 2013).
B.
We can quickly dispense with Tramont’s remaining
challenges.
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First, the company argues that the ALJ’s finding that the
Union received inadequate notice of the layoffs was
unsupported by substantial evidence. When Tramont raised
this claim in its exceptions, however, the Board “disregarded”
it because the company had “presented no argument in
support.” Tramont II, 365 NLRB No. 59, at 1 n.1; see also 29
C.F.R. § 102.46(a)(1)(i)(D) (requiring a party excepting to an
ALJ’s decision to provide “authorities and argument in support
of the exceptions”); id. § 102.46(a)(1)(ii) (authorizing the
Board to “disregard[]” any exception that “fails to comply”
with this requirement). Having neglected in its opening brief
here to make more than a glancing, footnoted response to the
Board’s decision to disregard this exception, Tramont has
forfeited the chance to challenge that decision. See, e.g., CTS
Corp. v. EPA, 759 F.3d 52, 64 (D.C. Cir. 2014) (“A footnote is
no place to make a substantive legal argument on appeal;
hiding an argument there and then articulating it in only a
conclusory fashion results in forfeiture.”); Board of Regents of
the University of Washington v. EPA, 86 F.3d 1214, 1221 (D.C.
Cir. 1996) (“[W]e have generally held that issues not raised
until the reply brief are waived.”).
Next, Tramont challenges the ALJ’s finding, affirmed by
the Board, that “the Union . . . did not waive its right to request
to bargain” by waiting until the March 30 meeting to request
effects bargaining. Tramont I, 364 NLRB No. 5, at 6 (ALJ
decision); see also Tramont II, 365 NLRB No. 59, at 1
(affirming the ALJ’s factual findings). But a union is obliged
to request bargaining over an employment action only if it has
received adequate advance notice of that action, see Regal
Cinemas, Inc. v. NLRB, 317 F.3d 300, 314 (D.C. Cir. 2003)
(“[N]otice of a fait accompli is simply not the sort of timely
notice upon which the waiver defense is predicated.” (quoting
International Ladies’ Garment Workers Union, AFL-CIO v.
NLRB, 463 F.2d 907, 919 (D.C. Cir. 1972))), and as we have
13
just explained, Tramont has forfeited its opportunity to
challenge the Board’s basis for rejecting its argument that the
Union received adequate notice. We therefore have no basis for
upsetting the ALJ’s supportable determination that
“[Tramont’s] failure to provide advance notice of its layoff[s]
create[d] a situation where the Union could not have given up
its bargaining rights by asking to bargain effects after the
layoffs took place.” Tramont I, 364 NLRB No. 5, at 7.
Moreover, even were we to overlook Tramont’s forfeiture,
substantial evidence supports the ALJ’s findings. See NLRB v.
Oklahoma Fixture Co., 79 F.3d 1030, 1035 (10th Cir. 1996)
(“Whether an employer has provided meaningful and timely
notice [of an action subject to bargaining] is essentially a
question of fact, and the Board’s findings in this regard are to
be accepted if supported by substantial evidence.”). Tramont,
after all, failed to notify the Union of the layoffs until after they
were implemented, and even then the Union learned of them
only indirectly through a layoff notice addressed solely to the
president of its Local, which said “nothing about other laid-off
employees.” Tramont I, 364 NLRB No. 5, at 6. Given these
undisputed facts, as well as Tramont’s delay in providing the
Union a list of laid-off employees, substantial evidence
supports the agency’s conclusions, first, that the window for
meaningful bargaining had already closed by the time the
Union received notice and, second, that the Union’s subsequent
delay in requesting bargaining therefore did not waive its
rights.
Finally, Tramont argues that the Board’s imposition of a
remedy more burdensome than the one it had imposed in its
initial, vacated order exceeded the scope of this court’s remand
order. Tramont, however, failed to make this argument to the
Board in a motion for reconsideration or otherwise. We
therefore lack jurisdiction to consider it. See 29 U.S.C. § 160(e)
14
(“No objection that has not been urged before the Board . . .
shall be considered by the court . . . .”); Flying Food Group,
Inc. v. NLRB, 471 F.3d 178, 185 (D.C. Cir. 2006) (“Where . . .
a petitioner objects to a finding on an issue first raised in the
decision of the Board rather than of the ALJ, the petitioner must
file a petition for reconsideration with the Board to permit it to
correct the error (if there was one).”).
III.
For the foregoing reasons, we grant Tramont’s petition for
review in part, remanding for the Board to provide an
explanation of the legal standard it applies when determining
which subjects of mandatory bargaining are displaced by a
Burns successor’s unilaterally imposed employment terms. In
all other respects, we deny the petition for review.
So ordered.