Rock-Tenn Services, Inc. v. NLRB , 594 F. App'x 897 ( 2014 )

FILED
NOT FOR PUBLICATION NOV 25 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROCK-TENN SERVICES, INC., formerly No. 12-70516
known as Smurfit-Stone Container
Enterprises, Inc., NLRB No. 32-CA-24480
Petitioner,
MEMORANDUM*
v.
NATIONAL LABOR RELATIONS
BOARD,
Respondent,
TEAMSTERS DISTRICT COUNCIL NO.
2, LOCAL 388-M, affiliated with
International Brotherhood of Teamsters,
Respondent-Intervenor.
NATIONAL LABOR RELATIONS No. 12-70934
BOARD,
NLRB No. 32-CA-24480
Petitioner,
TEAMSTERS DISTRICT COUNCIL NO.
2, LOCAL 388-M, affiliated with
International Brotherhood of Teamsters,
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Petitioner-Intervenor,
v.
ROCK-TENN SERVICES, INC., formerly
known as Smurfit-Stone Container
Enterprises, Inc.,
Respondent.
On Petition for Review of an Order of the
National Labor Relations Board
Argued and Submitted September 16, 2014
San Francisco, California
Before: FISHER, BERZON, and HURWITZ, Circuit Judges.
Petitioner/Cross-Respondent Rock-Tenn Services, Inc. (“Rock-Tenn” or
“the Company”), petitions for review of an order of the National Labor Relations
Board (“the Board”) holding that Rock-Tenn violated sections 8(a)(1) and 8(a)(5)
of the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 158(a)(5), (1) in
bargaining on the effects of a plant closure. The Board cross-applies for
enforcement of its order.
“The [Board’s] order will be enforced if it correctly applied the law and its
factual findings are supported by substantial evidence.” Retlaw Broad. Co. v.
NLRB, 172 F.3d 660, 664 (9th Cir. 1999); see also 29 U.S.C. § 160(e); Universal
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Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951). “On questions of law, we will
uphold the NLRB’s decisions related to the NLRA as long as they are reasonably
defensible.” NLRB v. Int’l Bhd. of Elec. Workers, Local 48, 345 F.3d 1049, 1054
(9th Cir. 2003).
(1) An employer has no duty to bargain with a union over its decision to
close its business or a part of its business. An employer does have a duty to
bargain in good faith with an incumbent union, however, over the effects of a
closure. See First Nat’l Maint. Corp. v. NLRB, 452 U.S. 666, 681 (1981). This
duty stems from sections 8(a)(5) and 8(d) of the NLRA, 29 U.S.C. §§ 158(a)(5),
(d), which make it an unfair labor practice for an employer or a union to fail to
bargain in good faith over certain “mandatory” subjects, First Nat’l Maint. Corp.,
452 U.S. at 676; that is, over “‘wages, hours, and other terms and conditions of
employment.’” NLRB v. Wooster Div. of Borg-Warner Corp., 356 U.S. 342, 349
(1958) (“Borg-Warner”).
“The duty [to bargain] is limited to [mandatory] subjects, and within that
area neither party is legally obligated to yield.” Id. By contrast, with regard to all
other, “permissive” subjects of bargaining, “each party is free to bargain or not to
bargain, and to agree or not to agree.” Id. For that reason, Borg-Warner holds, it
is a violation of the duty to bargain in good faith to “refuse to enter into
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agreements on the ground that they do not include some proposal which is not a
mandatory subject of bargaining.” Id. The parties agree that early termination of a
collective bargaining agreement (“CBA” or “contract”) that lacks a reopener
provision is a permissive subject of bargaining. See 28 U.S.C. § 158(d).
Rock-Tenn nonetheless argues it was entitled to “link[] permissive and
mandatory subjects of bargaining” because the subjects were part of a “quid pro
quo package proposal.” The Board rejected that formulation, if taken as a broad
proposition, in Borden, Inc., 279 N.L.R.B. 396, 399 (1986): “[i]f [the] argument were
accepted, it would mean that a permissive subject of bargaining would become
mandatory whenever it was presented together with a mandatory subject. That is
not the law.”
The Board has, however, held that a permissive bargaining subject may be
treated as a mandatory bargaining subject when there is a “sufficient nexus”
between the subjects, such that they are “inextricably intertwine[d].” Id.; see also
Regal Cinemas, Inc., 334 N.L.R.B. 304 (2001); NLRB v. Bartlett-Collins Co., 639
F.2d 652, 656 (10th Cir. 1981). Rock-Tenn argues that its bargaining posture
comes within that formulation. According to Rock-Tenn, “early termination of the
contract is inextricably linked to severance pay . . . because the parties had already
agreed to [a] framework” for future plant-closure effects-bargaining sessions under
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which Rock-Tenn could make offers regarding severance pay and benefits
continuation contingent on the Union’s acceptance of early CBA termination. We
assume, without deciding, that such a “framework” agreement would have altered
the bargaining obligations otherwise applicable under Borg-Warner, pursuant to
the Board’s “inextricably intertwined” exception.
The record, however, supports the Board’s determination that there was no
prior “agreement” to link the permissive subject of early CBA termination to Rock-
Tenn’s offers on mandatory subjects.
First, as the Board held, the language on which Rock-Tenn relies did not
obligate the Union to do anything; it only stated that it was “the Company’s intent
in future plant closures, if any, to bargain a severance/impact bargaining formula
that is not inconsistent with the severance/impact bargaining agreements at San
Jose.” (emphasis added). Nor did that language say anything specifically about
early CBA termination. Moreover, the early CBA termination for the San Jose
plant was to occur only after the plant closed or the last employee was laid off,
whichever was later, rather than before either of these events, as Rock-Tenn
insisted during the Fresno bargaining sessions.
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The Board therefore validly rejected Rock-Tenn’s position that it did not
commit an unfair labor practice by insisting on a permissive subject because there
was an agreement allowing it to do so.
(2) This Court reviews the Board’s choice of remedy for an abuse of
discretion. Sever v. NLRB, 231 F.3d 1156, 1165 (9th Cir. 2000). The Board’s
remedial order may only be reversed if it is “a patent attempt to achieve ends other
than those which can fairly be said to effectuate the policies of the Act.” Va. Elec.
& Power Co. v. NLRB, 319 U.S. 533, 540 (1943).
“For an effects-bargaining violation, the standard remedy is known as a
Transmarine remedy, and includes back pay and an order to bargain over the
effects of the decision. . . . [A]s with other remedies, the Board . . . has broad
discretion” in fashioning a Transmarine remedy for an effects-bargaining
violation. Int’l Bhd. of Elec. Workers, Local 21 AFL-CIO v. NLRB, 563 F.3d 418,
423 (9th Cir. 2009) (citing Transmarine Navigation Corp., 170 N.L.R.B. 389
(1968)).
Rock-Tenn has not shown that the Board abused its discretion in awarding a
Transmarine remedy to 92 Fresno plant employees. Rock-Tenn’s sole argument
on this point is that only the four employees discharged on the date of the closure
were “affected” by the violation. But the Board determined that the Company’s
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violation in fact affected all of the employees terminated from the Fresno plant as a
result of the closure: “[a]ll 92 . . . ha[d] been denied the benefit of collective-
bargaining representation concerning the effects of the Fresno closure,” in that the
“parties clearly intended to address the impact of the Fresno closure on all . . .
[Fresno] employees” in their effects bargaining, not just the four who were
terminated on the actual date of closure.
As the Board “provided ample reasoning in its opinion” for its decision to
award a Transmarine remedy to all 92 employees, we conclude the Board did not
abuse its discretion in this case. Int’l Bhd. of Elec. Workers, 563 F.3d at 425.
(3) Rock-Tenn is correct that any backpay previously paid to the unit
employees to date should be offset against any amounts determined to be due. See
Knoxville Distribution Co., 298 N.L.R.B. 688, 698 (1990), enf’d 919 F.2d 141 (6th
Cir. 1990) (unpublished disposition).
For the foregoing reasons, Rock-Tenn’s petition for review is DENIED and
the Board’s petition for enforcement is GRANTED.
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