Bob's Tire Co., Inc. v. NLRB ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 21, 2020 Decided November 20, 2020
No. 19-1174
BOB'S TIRE CO., INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
UNITED FOOD AND COMMERCIAL WORKERS LOCAL 328,
INTERVENOR
Consolidated with 19-1204
On Petition for Review and Cross-Application for
Enforcement
of an Order of the National Labor Relations Board
Gregory J. Koldys argued the cause and filed the briefs for
petitioner.
David A. Seid, Attorney, National Labor Relations Board,
argued the cause for respondent. With him on the brief were
Peter B. Robb, General Counsel, Ruth E. Burdick, Acting
Deputy Associate General Counsel, David Habenstreit,
Assistant General Counsel, and Julie Brock Broido,
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Supervisory Attorney. Meredith Jason, Supervisory Attorney,
entered an appearance.
Before: WILKINS and RAO, Circuit Judges, and EDWARDS,
Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
EDWARDS.
EDWARDS, Senior Circuit Judge: Section 8(d) of the
National Labor Relations Act (“NLRA” or “Act”) requires an
employer and a union representative of the employees “to meet
at reasonable times and confer in good faith with respect to
wages, hours, and other terms and conditions of employment,
or the negotiation of an agreement, or any question arising
thereunder, and the execution of a written contract
incorporating any agreement reached if requested by either
party.” 29 U.S.C. § 158(d). This duty to bargain covers
situations in which an employer decides to “replace[] existing
employees with those of an independent contractor to do the
same work under similar conditions of employment.” See
Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 213
(1964).
This case involves an unfair labor practice charge filed by
the National Labor Relations Board (“Board”) against Bob’s
Tire Company, Inc. (“Petitioner” or “Bob’s”). The charge
alleged that Bob’s had violated sections 8(a)(5) and (1) of the
Act, 29 U.S.C. § 158(a)(5) and (1), by failing to notify and
bargain with the United Food and Commercial Workers,
International Union, Local 328 (“Union”), the employees’
bargaining agent, before subcontracting bargaining unit work
and unilaterally implementing and discontinuing a
performance-based employee bonus program. Following a
hearing before an Administrative Law Judge (“ALJ”) and
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review by the Board, the Board issued a Decision and Order,
largely in agreement with the ALJ, finding that Bob’s had
violated sections 8(a)(5) and (1) of the Act. Bob’s Tire Co.,
Inc., 368 N.L.R.B. No. 33, at 1 (July 31, 2019). The Board
ordered Bob’s to cease and desist from unfair labor practices,
to make bargaining unit employees whole for any lost earnings,
to bargain on request with the Union before subcontracting
bargaining unit work or implementing any further changes in
terms and conditions of employment, and to restore the
performance-based bonus program pending the Union
requesting its rescission or the parties negotiating an agreement
on modifications to the program. Id. at 2. However, contrary to
the ALJ, the Board found that Bob’s did not violate the Act by
failing to pay its employees a Christmas bonus in 2015 without
giving the Union prior notice and an opportunity to bargain. Id.
Bob’s now petitions for review of the Board’s Order.
Bob’s argues that the subcontracted work was not bargaining
unit work and that, even if it was, the unit employees are owed
no remedy because the subcontracting did not cause the loss of
any jobs or hours of employment. In the alternative, Petitioner
contends Bob’s and the subcontractor Masis were joint
employers, and, therefore, the subcontractor’s employees
should have been considered part of the bargaining unit. Bob’s
also argues the Board erred in adopting the ALJ’s finding that
Bob’s violated the Act by unilaterally implementing and
terminating a performance-based employee bonus program.
The Board, joined by the Union, cross-petitions for
enforcement of its order.
We agree with the Board that there is substantial evidence
in the record supporting its findings that Petitioner failed to
bargain with the Union before subcontracting bargaining unit
work. Furthermore, we agree that an employer’s duty to
bargain over subcontracting “is not limited to situations in
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which employees are laid off or replaced.” Acme Die Casting,
315 N.L.R.B. 202, 202 n.1 (1994). We express no view as to
whether the employees affected by Bob’s unfair labor practices
are due any backpay. Questions regarding remedies can be
resolved during the Board’s compliance proceedings. See Sure-
Tan, Inc. v. NLRB, 467 U.S. 883, 902 (1984). We also reject
Petitioner’s “joint-employer” argument as specious. Finally,
we find we are without jurisdiction to consider Petitioner’s
arguments regarding the performance-based bonus program, as
Petitioner failed to present the issue before the Board. We
therefore deny the petition for review and grant the cross-
motion for enforcement of the Board’s order.
I. BACKGROUND
A. Statutory Background
Under the NLRA, an employer commits an unfair labor
practice if it “refuse[s] to bargain collectively with the
representatives of [its] employees.” 29 U.S.C. § 158(a)(5). As
noted above, “[t]he obligation to ‘bargain collectively’ requires
an employer to ‘confer in good faith with respect to wages,
hours, and other terms and conditions of employment.’” Regal
Cinemas, Inc. v. NLRB, 317 F.3d 300, 309 (D.C. Cir. 2003)
(quoting 29 U.S.C. § 158(d)). “An employer thus violates [the
Act] by unilaterally changing an existing term or condition of
employment without first bargaining to impasse.” Id. (citing
Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 198 (1991)).
An employer’s decision to subcontract bargaining unit
work to an “independent contractor to do the same work under
similar conditions of employment” is subject to mandatory
bargaining. Fibreboard Paper, 379 U.S. at 215. There is a
caveat, however. If an employer’s decision to engage an
independent contractor “involv[es] a change in the scope and
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direction of the [employer’s] enterprise,” there is a duty to
bargain with the employees’ union representative “only if the
benefit, for labor-management relations and the collective-
bargaining process, outweighs the burden placed on the
conduct of the business.” First Nat’l Maint. Corp. v. NLRB,
452 U.S. 666, 677, 679 (1981).
B. Petitioner’s Contract with Masis Staffing Solutions
Petitioner operates a tire recycling business in
Massachusetts. Prior to October 2015, Bob’s obtained most of
its workforce from B.J.’s Service Company, Inc. (“B.J.’s”), a
staffing agency that is a joint employer with Bob’s. Most of the
employees at Bob’s perform “yard work” or “general labor.”
Joint Appendix (“J.A.”) 34, 143. The workers unload tires from
trucks and separate “good” tires, for resale, from “damaged”
tires, for recycling. Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33,
at 4 (July 31, 2019). Workers recycle damaged tires using
various machines that separate tires from their rims, remove
sidewalls, and shred tires into chips. J.A. 34-35, 37, 57. Bob’s
typically sent shredded tires to a plant in Connecticut, which
converted them into fuel for a paper mill in Maine. Br. for Pet’r
at 4; J.A. 152.
On October 1, 2015, following an election, the Board
certified the Union as the exclusive bargaining agent for
workers at Bob’s in a unit consisting of the following
employees: “All full time and regular part time loaders,
unloaders, machine operators, yard workers, inspectors, tire
painters and truck helpers employed by [Bob’s] and/or [B.J.’s]
working at [Bob’s] . . . but excluding all other employees,
mechanics, shredder operators, truck drivers, clerical
employees, and supervisors as defined in the Act.” J.A. 245.
The unit was composed of 79 employees, most of whom came
from B.J.’s.
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According to Bob’s President, Robert Bates, sometime
before November 2015, the sale price of tire chips declined and
Bob’s began losing money producing and transporting the
chips. Br. for Pet’r at 4-5. In addition, the tire fuel plant in
Connecticut and the paper mill in Maine went bankrupt.
However, Bob’s was approached by an entity in India that was
willing to purchase baled tire treads.
On November 6, 2015, in anticipation of doing business
with the company in India, Bob’s entered into an agreement
with Masis Staffing Solutions (“Masis”) pursuant to which
Masis would furnish Bob’s with workers who would act as
“Light Industrial-Loaders/Unloaders.” J.A. 264, 271-72. The
agreement made clear that the workers would be employees of
Masis, not Bob’s. J.A. 264, 266. As a result, Bob’s did not enter
into a joint-employer relationship with Masis as it had with
B.J.’s.
It is undisputed that Bob’s did not notify the Union about
its staffing agreement with Masis, nor did it offer to bargain
with the Union regarding the work that would be performed by
Masis’s workers. When the Union requested a list of all
bargaining unit employees and information about any service
agreements that Bob’s had with other companies, Bob’s never
mentioned the Masis contract.
Masis employees worked at Bob’s until October 15, 2016.
Generally, between 18 and 24 Masis employees were engaged
at Bob’s each week during the period when Bob’s
subcontracted work to Masis. And the subcontracted work
sometimes included overtime. Between November 2015 and
October 2016, Masis furnished a total of 111 employees to
perform the subcontracted work at Bob’s. Only four of these
employees worked exclusively on cutting and banding tires that
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were shipped to India. One hundred and one Masis workers
performed “general labor,” clearly the sort of work routinely
performed by bargaining unit employees at Bob’s. Indeed, it is
undisputed that the Masis employees did not perform any work
that B.J.’s employees could not have done. J.A. 170.
In January 2016, Bob’s unilaterally decided to pay some
bargaining unit employees weekly bonuses for being “better
workers.” J.A. 97. The Union never received notice of the
bonus payments and never had an opportunity to bargain over
the matter. In September 2016, Bob’s unilaterally terminated
the bonus program, again without giving the Union an
opportunity to bargain.
C. The Board’s Proceedings
In September 2016, the Union filed a charge with the
Board, alleging that Bob’s had engaged in unfair labor
practices. A complaint was issued, and the case proceeded to a
hearing before an ALJ. The ALJ found that Petitioner had
violated the Act by (1) “failing to notify the [Union] in advance
and offering it an opportunity to bargain about the
subcontracting of unit work to Masis”; (2) “failing to pay unit
employees a Christmas bonus in 2015 as it had in previous
years”; and (3) “unilaterally initiating bonus or incentive
payments to unit employees in January 2016 and then
unilaterally terminating these payments in September 2016.”
Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33, at 6 (July 31, 2019).
Petitioner filed exceptions to the ALJ’s rulings, findings, and
conclusions. Id. at 1.
The Board adopted the ALJ’s findings that Bob’s had
violated sections 8(a)(5) and (1) of the NLRA by failing to
notify and bargain with the Union before subcontracting
bargaining unit work from November 6, 2015, to October 15,
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2016. Id. The Board rejected the ALJ’s conclusion regarding
the Christmas 2015 bonuses. Id. at 1-2. In the absence of
exceptions, the Board adopted the ALJ’s finding that Petitioner
violated sections 8(a)(5) and (1) of the Act by unilaterally
initiating and terminating a performance-based bonus program
for unit employees. Id. at 1 & n.1. The Board ordered Petitioner
to cease and desist from unfair labor practices, directed
Petitioner to bargain on request with the Union before
implementing any further changes in terms and conditions of
employment, and required Petitioner to restore the
performance-based bonus program pending collective
bargaining with the Union. Id. at 2. Finally, the Board ordered
Bob’s to make bargaining unit employees whole for any loss of
earnings and other benefits suffered as a result of Bob’s
subcontracting of bargaining unit work and cessation of
performance-based bonuses. Id.
Bob’s now petitions for review of the Board’s order as to
the subcontracting and 2016 bonus program. The Union does
not contest the Board’s decision rejecting the ALJ’s conclusion
regarding the Christmas 2015 bonuses.
II. ANALYSIS
A. Standard of Review
“We will uphold a decision of the Board unless it relied
upon findings that are not supported by substantial evidence,
failed to apply the proper legal standard, or departed from its
precedent without providing a reasoned justification for doing
so.” Int’l Longshore & Warehouse Union v. NLRB, 890 F.3d
1100, 1107 (D.C. Cir. 2018) (quoting E.I. Du Pont de Nemours
& Co. v. NLRB, 682 F.3d 65, 67 (D.C. Cir. 2012)). “[W]e may
not displace the Board’s choice between two fairly conflicting
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views, even though we would justifiably have made a different
choice had the matter been before us de novo.” Regal Cinemas,
Inc. v. NLRB, 317 F.3d 300, 306 (D.C. Cir. 2003) (alterations,
internal quotation marks, and citation omitted).
The Board’s construction of the NLRA, including its
classification of “terms and conditions of employment” as
mandatory subjects of bargaining, 29 U.S.C. § 158(d), is
afforded “considerable deference” and upheld so long as it is
“reasonably defensible.” Regal Cinemas, 317 F.3d at 307
(quoting Ford Motor Co. v. NLRB, 441 U.S. 488, 495, 497
(1979)).
B. Petitioner’s Subcontracting of Unit Work
Substantial evidence supports the Board’s conclusion that
Bob’s violated the NLRA by subcontracting bargaining unit
work to Masis without notifying or bargaining with the Union.
The record makes clear that Petitioner contracted with Masis to
have Masis’s employees perform work that otherwise would
have been performed by employees in the bargaining unit.
The evidence shows that 101 of the 111 Masis employees
used by Bob’s performed “general labor,” i.e., work of the sort
routinely performed by unit employees. J.A. 276-80. Only four
of the 111 Masis workers exclusively cut and strapped
sidewalls and treads for tires sent to India. Bob’s Tire Co., Inc.,
368 N.L.R.B. No. 33, at 5 (July 31, 2019). Indeed, Bob’s
President, Robert Bates, conceded that he was “sure [the B.J.’s
employees] could have” performed the work performed by the
Masis workers. J.A. 164-65; see also J.A. 170 (agreeing there
was nothing Masis workers did “that one of the BJ’s employees
could not have done”). Bates also acknowledged that he could
have directly hired employees to complete the work done by
Masis workers. J.A. 166. Finally, Bates testified that the Masis
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workers did not use any special skills and could be trained in
about a day. See J.A 171. The record thus contains substantial
evidence to support the Board’s finding that the Masis workers
completed “the same work” as the bargaining unit members
“under similar conditions of employment.” See Fibreboard
Paper Prods. Corp. v. NLRB, 379 U.S. 203, 215 (1964).
Petitioner argues that the subcontracting arrangement with
Masis did not result in a violation of its duty to bargain because
Bob’s engagement in the India project and the resulting work
requirements reflected “a change in the scope and direction of
[its] enterprise.” See First Nat’l Maint. Corp. v. NLRB, 452
U.S. 666, 677 (1981). This claim is belied by the record.
Substantial evidence supports the ALJ’s finding, adopted by
the Board, that Bob’s engagement in the India project did not
represent a change in the scope and direction of the company.
Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33, at 5 (July 31, 2019).
As noted above, only four Masis employees worked
exclusively on cutting sidewalls and strapping treads for tires
sent to India. Id. The record is clear that most Masis workers
performed tasks of the sort that were routinely performed by
bargaining unit employees.
C. Applicability of the Duty to Bargain
Petitioner also argues that bargaining unit members
suffered no adverse impact from the Masis subcontract, as if to
suggest that, if true, this fact vitiates the duty to bargain.
Petitioner’s claim is mistaken. First, Board precedent makes
clear that the duty to bargain over arrangements to subcontract
bargaining unit work “is not limited to situations in which
employees are laid off or replaced.” Acme Die Casting, 315
N.L.R.B. 202, 202 n.1 (1994). As the First Circuit has
explained, “[u]nion members have an interest in an employer’s
subcontracting decision in addition to the potential for layoffs.
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This work provides bargaining unit members with the
opportunity to obtain extra shifts (possibly at overtime rates) or
to expand the size of the unit through the hiring of new
employees.” Sociedad Española de Auxilio Mutuo y
Beneficiencia de P.R. v. NLRB, 414 F.3d 158, 167 (1st Cir.
2005).
Here, the ALJ concluded, and the Board agreed, that “[a]
bargaining unit is adversely affected whenever bargaining unit
work is given away to nonunit employees regardless of whether
the work would have been done by employees already in the
unit or by employees who would have been hired into the unit.”
Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33, at 6 (July 31, 2019).
In addition, the Board found in this case that there “appear[ed]
to have been opportunities for increased overtime for unit
employees that were adversely affected by the influx of Masis
employees.” Id.; see also J.A. 76 (employee Tomas Ventura)
(testifying that his hours were modified during the time when
Masis workers were hired); J.A. 165-66 (Bob’s President
Robert Bates) (conceding that Bob’s could have hired
additional unit employees, but chose to subcontract with Masis
instead).
The simple point here, which is dispositive of the duty to
bargain charge, is that Bob’s failed to give notice to the Union
or discuss any of the details regarding a subcontracting
arrangement with an outside contractor to furnish workers to
perform bargaining unit work. The Union obviously had an
interest in understanding, discussing, and possibly objecting to
the use of non-unit employees to perform bargaining unit work.
Indeed, the Union might have claimed that the Masis
employees should have been treated as part of the existing
bargaining unit pursuant to the Board’s accretion doctrine. See
Recology Hay Rd., 367 N.L.R.B. No. 32, at 2 (Feb. 27, 2019)
(explaining that the Board finds an accretion “when the
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additional employees have little or no separate group identity
and thus cannot be considered to be a separate appropriate unit
and when the additional employees share an overwhelming
community of interest with the preexisting unit to which they
are accreted” (quoting Safeway Stores, Inc., 256 N.L.R.B. 918,
918 (1981))). In other words, the Union had good reasons to
secure its bargaining rights under the NLRA, and there were
issues amenable to bargaining. And there is no doubt that Bob’s
had a legal obligation to give notice to the Union and then
bargain with the employees’ agent before subcontracting their
unit work.
Bob’s unlawful failure to bargain is distinct from the
question of whether employees in the bargaining unit are due
any backpay under the Board’s order. That remedy question
can be properly raised during the Board’s compliance
proceedings. It is well understood that “compliance
proceedings provide the appropriate forum where the Board
and petitioners will be able to offer concrete evidence as to the
amounts of backpay, if any,” to which employees are entitled.
Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 902 (1984); see also
Chevron Mining, Inc. v. NLRB, 684 F.3d 1318, 1330 (D.C. Cir.
2012). Whether or not back pay is due, however, in no way
affects the efficacy of the Board’s cease and desist order
against Bob’s for its unlawful refusal to bargain.
D. Petitioner’s Remaining Arguments
As an alternative argument, Petitioner contends that Bob’s
and Masis are joint employers, such that Masis workers should
have been considered part of the bargaining unit. This is a
specious claim. Petitioner concedes that the Board adopted the
ALJ’s finding that workers supplied by Masis were not Bob’s
employees. See Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33, at 1
(July 31, 2019). Substantial evidence in the record supports this
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finding. The November 2015 staffing agreement provided that
Masis had the sole right to hire, discipline, fire, assign, and
reassign workers. J.A. 264. Furthermore, Bob’s did not include
the Masis workers in a list of unit employees when the Union
requested this information. Bob’s Tire Co., Inc., 368 N.L.R.B.
No. 33, at 4-5 (July 31, 2019). And, tellingly, if Bob’s was
confused over whether Masis’s employees should have been
included in the bargaining unit, it could have filed a timely
clarification petition with the Board. See, e.g., St. Francis
Hosp., Inc., 282 N.L.R.B. 950, 951 (1987); see also Dixie Elec.
Membership Corp. v. NLRB, 814 F.3d 752, 756-57 (5th Cir.
2016).
Finally, we are without jurisdiction to consider Petitioner’s
argument regarding the 2016 bonus program because Bob’s
failed to raise the matter with the Board before filing a petition
for review with this court. The ALJ found that Bob’s violated
section 8(a)(5) and (1) of the Act by unilaterally implementing
a performance-based employee bonus program in January
2016, then unilaterally discontinuing it in September 2016.
Bob’s Tire Co., Inc., 368 N.L.R.B. No. 33, at 6 (July 31, 2019).
Bob’s never raised an exception to this finding with the Board.
Id. at 1 n.1. In the absence of any exceptions, the Board adopted
the ALJ’s finding that Bob’s violated the Act by unilaterally
implementing and rescinding the performance-based bonuses.
Id. at 1. There are no extraordinary circumstances justifying
Bob’s failure to pursue this issue with the Board. Therefore, we
are without authority to consider the matter. See Advancepierre
Foods, Inc. v. NLRB, 966 F.3d 813, 818 (D.C. Cir. 2020); see
also 29 U.S.C. § 160(e) (“No objection that has not been urged
before the Board . . . shall be considered by the court, unless
the failure or neglect to urge such objection shall be excused
because of extraordinary circumstances.”).
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III. CONCLUSION
For the reasons set forth above, we deny the petition for
review and grant the cross-motion for enforcement of the
Board’s order.
So ordered.