Truserv Corp. v. National Labor Relations Board , 254 F.3d 1105 ( 2001 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 19, 2001 Decided July 6, 2001
No. 00-1356
TruServ Corporation, f/k/a Cotter & Company,
Petitioner
v.
National Labor Relations Board,
Respondent
Teamsters Local Union No. 293,
Intervenor
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board
Frank W. Buck argued the cause for petitioner. On the
briefs were Mark V. Webber and Kenneth D. Schwartz.
Kathy B. Houlihan entered an appearance.
Usha Dheenan, Attorney, National Labor Relations Board,
argued the cause for respondent. With her on the brief were
Leonard R. Page, Acting General Counsel, John H. Fergu-
son, Associate General Counsel, Aileen A. Armstrong, Deputy
Associate General Counsel, and Charles Donnelly, Superviso-
ry Attorney.
Basil William Mangano and John M. Masters were on the
brief for intervenor Teamsters Local Union No. 293.
Before: Edwards, Chief Judge, Rogers and Garland,
Circuit Judges.
Opinion for the Court filed by Circuit Judge Rogers.
Rogers, Circuit Judge: TruServ Corporation (formerly
Cotter & Co.) petitions for review of a decision and order by
the National Labor Relations Board. See Cotter & Co., 331
N.L.R.B. No. 94 (July 19, 2000). TruServ challenges for lack
of substantial evidence the Board's findings that it violated
s 8(a)(5) and (1) of the National Labor Relations Act, 29
U.S.C. s 158(a)(1), (5) (1998), when it implemented terms and
conditions of employment prior to reaching a genuine bar-
gaining impasse, disciplined unit employees pursuant to uni-
laterally implemented work rules, and refused to process
employee grievances. TruServ also seeks reversal or modifi-
cation of the Board's remedial order, which it maintains
appears to be punitive because the order would provide a
windfall to the Union's health fund for healthcare claims paid
by the company. We grant the petition on the issue of
impasse because the Board's findings on that issue are not
supported by substantial evidence; hence we do not reach
TruServ's alternative contention that the Union had waived
the right to bargain on work rules. We deny the petition's
challenge to the processing of grievances. Because, however,
the Board did not address TruServ's argument that the
remedial order should allow for a set-off for health insurance
payments made by TruServ, we remand that issue to the
Board.
I.
TruServ Corporation manufactures and distributes hard-
ware to various True Value Hardware stores. Teamsters
Local 293 is the bargaining representative for the warehouse
unit employees at the Company's Westlake facility.1 A collec-
tive bargaining agreement, effective September 1, 1991, was
due to expire on August 31, 1995. On July 20, 1995, the
Company and the Union began negotiating for a successor
bargaining agreement. At the outset, the Company ex-
pressed its concerns with the facility's efficiency and produc-
tivity, namely, that sales from the Westlake facility had
decreased at a higher rate than sales for the Company as a
whole, and that errors in filling orders at the Westlake facility
had increased significantly.2 After the Company's opening
statement, the Union submitted a complete contract proposal
on both economic and non-economic issues. Consistent with
its past negotiations with the Union, the Company deferred
discussion of "economic" (wages) issues until the end of the
negotiations period, and on July 21, the parties agreed on a
three-year term for the new agreement and on language for
the employee grievance procedure. During the eight days of
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1 The warehouse unit includes order fillers, stock employees,
shippers, receivers, certain maintenance positions, and a janitor.
2 According to testimony before the Administrative Law Judge,
the Company anticipated that negotiations would be particularly
difficult because the Company sought significant changes to address
its concerns with efficiency and productivity; consequently, the
Company asked to commence negotiations earlier than usual. The
Company believed that it needed to expand the work week (thereby
minimizing overtime) and to change the holiday schedule in order to
respond to its members' demands for faster turnaround on orders.
This was necessary because the Company's members, if dissatisfied,
could buy products from another supplier. The Company also
expressed concern about rising health care costs and sought to
make its own health care program available. Prior to the com-
mencement of negotiations, the Company set a "bottom line" for
wage increases, opposing a large pay increase in part because of
employees' sub-standard performance.
negotiations,3 the key issues discussed were (1) holidays, (2)
the workweek, workday schedule, (3) healthcare, and (4)
wages.
A. Holidays. The Company initially proposed to convert
certain contractual holidays (especially the day after Thanks-
giving) to "personal days," which the employees could use at
other times, so that the warehouse could remain open to
process the high volume of orders. The Union initially
proposed to add two holidays to the ten existing contractual
holidays, and to limit overtime on the days before and after a
holiday. The Union later reduced its demands to one addi-
tional declared holiday and proposed to abandon its overtime
proposal for working on holidays if the Company agreed to
make concessions on overtime. The Company rejected the
Union's proposal, offering instead to convert four declared
holidays to personal days. On August 29, the Company
further modified its proposal to require the conversion of only
one holiday--the day after Thanksgiving. The Union condi-
tioned acceptance on the Company's agreement to declare an
additional holiday (Martin Luther King Day) a personal day.
The Company showed no willingness to accept this condition.
B. Workweek, Workday Schedule. The Company
sought to implement a workweek, workday schedule that
would shorten the turn-around time on receiving orders and
allow it to deliver merchandise to its members in one day.
The expiring agreement provided for a Monday through
Friday schedule of five eight-hour days, and for time and one-
half on Saturdays and double time on Sundays. The Compa-
ny proposed either a four-day, ten-hour or a five-day, eight-
hour week, with Saturdays and Sundays included as part of
the regular work week (thus not requiring overtime). See
Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The Union
rejected this proposal; it opposed the idea of Saturdays and
Sundays as ordinary workdays. On August 28, the Company
modified its proposal; the new proposal called for a Sunday
to Saturday workweek with either four ten-hour workdays or
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3 The negotiations took place over a six week period, on July 20
and 21 and August 2, 3, 4, 23, 28, and 29.
five eight-hour days; overtime would accrue after four ten-
hour days at 1.5 times the base rate for the fifth and sixth
days, and double time on the seventh day. The "four tens"
and "five eights" shifts would be filled first voluntarily and
then by shift in accordance with seniority and ability. In
response to the Company's modifications, the Union offered
the following proposal: For inbound work (i.e., receiving and
stocking merchandise), four ten-hour days or five eight-hour
days, with weekend work voluntary; for outbound work, five
eight-hour days or four ten-hour days, with weekend work at
straight time. The Company responded that it would pay
time and one-half beyond eight hours for the five eight-hour
days, and beyond ten hours for the four ten-hour days, but
refused to pay double time for the sixth day.
C. Health Care. The Company proposed that the Union
abandon the Teamsters Fund and instead adopt the Compa-
ny's health plan. The Union proposed to maintain the Team-
sters Fund exclusively, with the Company paying the entire
amount of cost increases to contributions to the Fund and
eliminating employee co-payments. On August 28, the Com-
pany modified its offer, proposing inclusion of its plan as an
option for employees. If employees chose the Company plan,
the Company would pay twenty-five percent of the cost; if
employees opted to stay in the Teamsters Fund, the Compa-
ny would pay a predetermined monthly contribution per
employee in the first year, and 75% of the cost of the
Company's health plan in the second year. Although the
Company later increased this amount, the Union continued to
propose higher monthly contributions and elimination of em-
ployee copayments.
D. Wages. The Company had a two-tier, progressive
wage structure: The bottom tier consisted of employees hired
after August 27, 1985; the top tier was composed of employ-
ees hired before that date. The Union initially proposed a
general increase of 75 cents per hour during each year of the
contract; a merge of the two tiers by equalizing lower and
top tier wage levels over the 3 years of the contract; and
inclusion of employees in the Company's 401(k) program.
See Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. On
August 28, the Company proposed a continued two-tier sys-
tem, with an increase in bottom tier rates of 20 cents in each
of the three years of the agreement, and an increase in top
tier rates of 20 cents, 10 cents, and 10 cents in each of the
three years, respectively. The Union counterproposed a
merge of the two tiers over four years; a general wage
increase of 65 cents in each year of the agreement; and
deferred employee participation in the Company's 401(k)
program until the second year of the agreement. The Union
also withdrew its earlier proposal for double-time payment for
overtime. The Company counteroffered an increase in bot-
tom tier rates of 25 cents, 25 cents, and 20 cents, and in top
tier rates of 25 cents, 15 cents, and 10 cents in each year of
the agreement. On August 29, the parties again modified
their proposals. The Union proposed a top tier wage in-
crease of 60 cents in the first year and 55 cents in the second
and third years; a merge of the two tiers over a five-year
period; a reduction in shift premium; and deferred employee
participation in the Company's 401(k) plan until the third year
of the agreement. The Union also abandoned its earlier
proposal to limit mandatory overtime. The Company coun-
teroffered with wage increases of 30 cents, 30 cents, and 25
cents for the bottom tier, and 25 cents, 15 cents, and 10 cents
for the top tier for the three years of the agreement. In
response, the Union proposed maintaining the two-tier sys-
tem in exchange for wage increases of 60 cents, 70 cents, and
80 cents over three years for the lower tier and 50 cents for
each of the three years for the top tier. The Union also
abandoned its request for employee participation in 401(k)
plans and reduced its shift premium demand to 30 cents per
hour, but its wage increase proposals remained over twice
what the Company proposed.
In retrospect, the parties present conflicting accounts of
the extent of progress in the negotiations, and of the degree
to which the parties had exhausted their willingness to make
further concessions. The Union points to statements by its
spokesman that negotiations had advanced on a number of
issues, including holidays, and to a statement by the Union's
attorney at the outset of the August 28 session that no
impasse existed because both parties had made concessions
and there were a "lot of points the Union was willing to move
on." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 8. The
Company, on the other hand, points to statements indicating
impasse in the key areas of negotiation: (1) a statement on
August 4 by a member of the Union's negotiating committee
affirming that there was an impasse at least as to holidays;
(2) August 23 statements by both the Company and the Union
that the parties were at impasse on a number of "non-
economic" issues, including the Company's workweek, work-
day proposal; and (3) the Union's declaration upon receiving
the Final Offer that there was nothing in the Final Offer that
it could recommend to unit employees.
On August 29, the Company issued what it termed its "last,
best, and final offer." For outbound work, the Company
offered a workweek, workday schedule of four ten-hour or
five eight-hour days, Monday through Friday, staffed first on
a voluntary basis and then on a mandatory basis according to
seniority and ability. Overtime in a four-day week would be
paid at time and a half on the fifth and sixth days, and double
time on the seventh day; overtime for the five-day workweek
would be the same as under the expiring agreement. For
inbound work, the Final Offer required four ten-hour or five
eight-hour days Sunday through Saturday. Overtime for the
five-day schedule would be time and one-half for the sixth day
and double time on the seventh day. For the four-day week,
overtime would be the same as for outbound work. As to
health care, the Final Offer included the Company's health
plan as an option for unit employees, with monthly contribu-
tions by the Company of $252, $260, and $270 over the three
years of the agreement. As to wages, the Company present-
ed its "bottom line" proposal: an increase of 30 cents, 30
cents, and 30 cents for the bottom tier, and 25 cents, 15 cents,
and 15 cents for the top tier. Prior proposals (other than
wages and health care payments) remained unchanged. The
Final Offer thus remained substantially similar to the Compa-
ny's earlier proposals and its third wage proposal of August
29. The Final Offer provided that if the employees ratified
the contract by August 31, they would receive an extra 5
cents in their wages for the third year. The Company stated
that it intended to implement its Final Offer if it was not
approved by August 31.
The Union objected to the Company's conclusion of im-
passe, stating through its attorney upon receipt of the Com-
pany's Final Offer that "no impasses existed and that [the
Company] would violate the Act if it implemented the offer."
Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 9. The Union
further stated that the Company's Final Offer contained
nothing that the Union could recommend to the employees.
See id. at 1-2. On August 30, the unit employees unanimous-
ly voted not to vote on the Final Offer and to strike; howev-
er, a strike never took place. On August 31, the Union
informed the Company that its Final Offer was "not even
dignified with a vote," and requested further meetings to
continue bargaining.4 The Company declined further meet-
ings, stating that the Union had the Company's final offer,
and the Union filed an unfair labor practice charge.5
On September 6, 1995 the Company implemented its Final
Offer, terminating the contractual grievance and arbitration
procedure and the automatic deduction of union dues and
initiation fees. On September 10, the Union sought to re-
sume negotiations. On September 22, the Company imple-
mented new work rules, and thereafter took disciplinary
action against four employees based, in part, on the new work
rules.6
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4 The record does not indicate that the Union representative
notified the Company of the areas in which the Union was willing to
grant further concessions.
5 The Union filed a second unfair labor practice charge on
March 21, 1996. After the Board consolidated the Union's unfair
labor practice charges, the Union filed an amended charge on April
3, 1996. A consolidated complaint was filed on May 30, 1996.
6 The four employees were Matthew Dillon, Alejandro Gonza-
lez, Richard Martin, and Adam Csongedi. Dillon received a verbal
warning on October 3, 1995, a written warning on November 2,
1995, and a one-week suspension on November 7, 1995, for refusing
to work scheduled overtime pursuant to amended Work Rule 5.
See infra note 11. After he filed a grievance over the suspension,
the Company informed Dillon, without the participation of the
Following a hearing, an Administrative Law Judge ("ALJ")
found that the Company "did not demonstrate that an im-
passe existed at the time it stopped bargaining on August 29"
because the parties' bargaining sessions "[did] not constitute
the type of exhaustive negotiations which might prompt a
finding of impasse." Cotter & Co., 331 N.L.R.B. No. 94, slip
op. at 10. The ALJ further found that the Company had
unlawfully disciplined and discharged employees pursuant to
unlawfully implemented work rules, bypassed the Union in
dealing directly with an employee, and refused to process
employee grievances. See id. at 9-12. The Board affirmed
the ALJ's findings that the Company violated s 8(a)(5) and
(1) "by refusing to meet and bargain with the Union, by
implementing its last offer, including new work rules, in the
absence of a valid bargaining impasse, by bypassing the
Union and dealing directly with a unit employee, and by
refusing to process employees' grievances." Id. at 1.7
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Union, that the suspension was a mistake and paid him for the time
that he had lost. Dillon was subsquently fired for violating the
Company's no-fault attendance policy; the ALJ found that this
discharge was not improper. See Cotter & Co., 331 N.L.R.B. No.
94, slip op. at 11. Gonzalez, who was found to have violated
amended Work Rule 5, received a verbal warning on October 10,
1995, a third-step suspension on January 2, 1996, and was dis-
charged for subsequent work rule violations on January 12, 1996.
Martin received a verbal warning in September 1995, and a written
warning in November 1995, for failing to work scheduled overtime
in violation of amended Work Rule 5. In December 1995, Martin
was suspended for being out of his work area pursuant to a pre-
impasse portion of Work Rule 5, and was discharged on February
20, 1996, for again being out of his work area. Csongedi was
suspended on March 29, 1996, for violating a quality standard under
the expiring agreement; the prior verbal and written warnings that
formed the basis of the suspension, however, were issued pursuant
to post-impasse quality standards.
7 The Board also affirmed the ALJ's finding that the Compa-
ny's discipline of two employees (Gonzalez and Csongedi) was
II.
Section 8(a)(5) of the Act makes it an unfair labor practice
for an employer "to refuse to bargain collectively with the
representatives of his employees." 29 U.S.C. s 158(a)(5).
Mandatory areas of collective bargaining include "wages,
hours, and other terms and conditions of employment." 29
U.S.C. s 158(d); see also Litton Fin. Printing Div. v. NLRB,
501 U.S. 190, 198 (1991); NLRB v. Katz, 369 U.S. 736, 742-43
(1962). An employer violates this duty to bargain if, absent a
final agreement or a bargaining impasse, he unilaterally
imposes changes in the terms and conditions of employment.
See 29 U.S.C. s 158(d); Katz, 369 U.S. at 742-43; Taft
Broad. Co., 163 N.L.R.B. 475, 478 (1967), petition for review
denied sub nom. American Fed'n of Television & Radio
Artists v. NLRB, 395 F.2d 622, 624 (D.C. Cir. 1968).
A bargaining impasse--which justifies an employer's unilat-
eral implementation of new terms and conditions of employ-
ment--occurs when "good faith negotiations have exhausted
the prospects of concluding an agreement," Taft, 163
N.L.R.B. at 478, leading both parties to believe that they are
"at the end of their rope." PRC Recording Co., 280 N.L.R.B.
at 635; see also Teamsters Local 639 v. NLRB, 924 F.2d
1078, 1084 (D.C. Cir. 1991); American Fed'n of Television
and Radio Artists, 395 F.2d at 628. For an impasse to be
found, the parties must "have reached 'that point of time in
negotiations when [they] are warranted in assuming that
further bargaining would be futile.' " Wycoff Steel, Inc., 303
N.L.R.B. 517, 523 (1991) (quoting Patrick & Co., 248
N.L.R.B. 390, 393 (1980)). Whether the parties have reached
this point is a case-specific inquiry; "[t]here is no fixed
definition of an impasse or deadlock which can be applied
mechanically to all factual situations." Dallas Gen. Drivers,
Warehousemen and Helpers, Local 745 v. NLRB, 355 F.2d
__________
unlawful because "the [Company's] unlawfully imposed [work] rules
were a factor" in those disciplinary actions. Cotter & Co., 331
N.L.R.B. No. 94, slip op. at 3. The Board reversed the ALJ's
conclusion that the Company violated s 8(a)(5) and (1) by refusing
to deduct Union dues after expiration of the existing bargaining
agreement. See id., at 4.
842, 845 (D.C. Cir. 1966). Among the factors that the Board
considers in evaluating the existence of an impasse are "the
bargaining history, the good faith of the parties in negotia-
tions, the length of the negotiations, the importance of the
issue or issues as to which there is disagreement, [and] the
contemporaneous understanding of the parties as to the state
of negotiations." Taft, 163 N.L.R.B. at 478. After weighing
these factors, the Board will find an impasse if there is "no
realistic possibility that continuation of discussions ... would
have been fruitful."8 American Fed'n of Television and
Radio Artists, 395 F.2d at 628.
The Board concluded that "the parties had not bargained to
impasse before the [Company] unilaterally implemented
changes in the unit employees' terms and conditions of em-
ployment." Cotter & Co., 331 N.L.R.B. No. 94, slip op. at 1.
In so finding, the Board "emphasize[d] that, until the [Com-
pany] abruptly claimed that its 'last, best and final offer' was
on the table and would be implemented unilaterally if not
accepted, both the [Company] and the Union had demonstrat-
ed considerable flexibility and willingness to compromise their
positions." Id. This, the Board observed, was evidenced by
the parties' concessions in the immediately preceding bar-
gaining sessions; the Union's statement, upon receiving the
Company's final proposal, that the parties were not at im-
passe; and the Union's subsequent request for additional
meetings.9 See id. at 1-2. In the Board's view, these circum-
__________
8 An impasse does not "permanently relieve[ ] [the parties] of
the duty to deal with each other." NLRB v. McClatchy Newspa-
pers, 964 F.2d 1153, 1164 (D.C. Cir. 1992). As the court observed in
McClatchy Newspapers, an "impasse is only a temporary deadlock
or hiatus in negotiations, 'which in almost all cases is eventually
broken, through either a change of mind or the application of
economic force.' " Id. at 1165 (quoting Charles D. Bonanno Linen
Serv., Inc. v. NLRB, 454 U.S. 404 (1982) (internal citation omitted));
see also Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232
(D.C. Cir. 1996).
9 On appeal, the Board does not rely on the ALJ's findings,
which the Company challenges, that the Company (1) rejected "out-
stances cast doubt on the Company's characterization of its
August 29 proposal as a "final offer" and indicated that "the
parties did not have a contemporaneous understanding that
they were at impasse." Id. at 2. The Board declined to
consider the Union's conduct upon receiving the Company's
August 29 proposal--specifically, the Union's statement that
the Company was not offering anything that the Union could
recommend to its employees--as indicative of the Union's
final bargaining position. Rather, the Board characterized
the Union's statement as "an understandable expression of
dissatisfaction" with the Company's "abrupt declaration that
its most recent offer was 'final' and would be implemented
unilaterally if rejected." Id.
The Company contends on appeal that the Board (and the
ALJ) erred in interpreting the Company's good-faith bargain-
ing10 and consequent concessions immediately preceding its
Final Offer as an indication that the Final Offer was not truly
final. The Company maintains that the Board ignored the
record as a whole, which, in the Company's view, "would tell
any experienced negotiator that the parties were at impasse."
Br. for Petitioner at 32. The Board, on the other hand,
contends that "the parties had made significant progress and
demonstrated considerable flexibility on [key issues]," and
that "no contemporaneous understanding of impasse by both
sides existed, because the Union explicitly denied the exis-
tence of impasse and repeatedly requested the continuance of
bargaining, which the Company refused." Br. for Respon-
dent at 16.
The court has long recognized that "[i]n the whole complex
of industrial relations few issues are less suited to appellate
__________
of-hand" "virtually all of the Union's proposals" during the first six
days of bargaining, (2) proposed language changes that were "radi-
cal departures" from the expiring agreement, (3) did not make an
economic proposal until the penultimate bargaining session, and (4)
did not give the Union information about its work week proposal
until later in negotiations. See id. at 10.
10 Neither the Board nor the ALJ found that the Company
negotiated in bad faith. See Cotter & Co., 331 N.L.R.B. No. 94, slip
op. at 1-2, 7-9.
judicial appraisal than evaluation of bargaining processes or
better suited to the expert experience of a board which deals
constantly with such problems." American Fed'n of Televi-
sion and Radio Artists, 395 F.2d at 627 (quoting Dallas Gen.
Drivers, 355 F.2d at 844-45). Thus, the court ordinarily
defers to the Board's fact-finding as to the existence of a
bargaining impasse. See Teamsters Local 639, 924 F.2d at
1083; Dallas Gen. Drivers, 355 F.2d at 844-45. To do so,
however, the court must be satisfied that the Board's findings
are supported by substantial evidence on the record consid-
ered as a whole. See 29 U.S.C. s 160(e) (1998); Universal
Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951); Serra-
monte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 233 (D.C. Cir.
1996); Teamsters Local 175 v. NLRB, 788 F.2d 27, 30 (D.C.
Cir. 1986); American Fed'n of Television and Radio Artists,
395 F.2d at 627. We hold that the Board's conclusion of no
impasse fails to satisfy this standard because the Board's
findings that the Company's Final Offer was not truly "final"
and that neither party was at the end of its bargaining rope
are not supported by substantial evidence.
First, nothing in the record negates the Company's classifi-
cation of its August 29 proposal as its "last, best, and final
offer." Indeed, the record demonstrates that the Company,
which was facing economic exigencies, bargained in good
faith, made substantial concessions, and ultimately reached a
point when it was simply unwilling to compromise further.
Although merely labeling an offer as "final" is not dispositive,
see Teamsters Local 175, 788 F.2d at 31; Chicago Typograph-
ical Union v. Chicago Sun-Times, 935 F.2d 1501, 1508 (7th
Cir. 1991), the circumstances here are telling. On August 4,
the Company advised the Union that when it had reached the
limits of its bargaining, it would call its final proposal its "last,
best, and final" offer. Thus, unlike Teamsters Local 175 and
Chicago Typographical Union, where the employer set forth
a number of offers, all of which it termed "final," the Compa-
ny signaled to the Union that it would use this particular
language only when it had reached its bargaining limit.
Moreover, the Company's demonstrated good faith in bar-
gaining--a Taft factor that the Board and the ALJ neglected
to apply--leaves no grounds for rejecting the Company's
characterization of its August 29 proposal as its Final Offer.
The record evidence thus demonstrates that in the face of
eight days of what were uniformly perceived as difficult
negotiations, the Company engaged in the kind of good-faith,
hard bargaining that characterizes impasse. See Georgia-
Pacific Corp., 305 N.L.R.B. 112, 121 (1991); Salinas Valley
Ford Sales, 279 N.L.R.B. 679, 690 (1986); Seattle-First Nat'l
Bank, 267 N.L.R.B. 897, 898-99 (1983), rev'd in part on other
grounds, Seattle-First Nat'l Bank, 270 N.L.R.B. 389 (1984).
The Board's refusal to accept the Company's Final Offer as
truly "final" was not based on the record evidence; rather,
the Board relied on its intuitive belief that, upon further
bargaining, each side would have made additional concessions.
The Board stated that "there had been movement on both
sides concerning important subjects such as wages, benefits,
and holidays, and the parties continued making concessions
until the [Company 'abruptly'] cut off that process." Cotter &
Co., 331 N.L.R.B. No. 94, slip op. at 1. This approach,
however, is impermissible, for it amounts to an intervention
by the Board in the parties' substantive negotiations. In
NLRB v. American National Insurance Co., 343 U.S. 395,
404 (1952), the Supreme Court observed that the Act's re-
quirement of good faith bargaining "does not compel either
party to agree to a proposal or require the making of a
concession." Therefore, the Court held, "the Board may not,
either directly or indirectly, compel concessions or otherwise
sit in judgment upon the substantive terms of collective
bargaining agreements." Id.; see also H.K. Porter Co. v.
NLRB, 397 U.S. 99, 103 (1970). In short, the parties remain
in control of their negotiations, and each party, not the Board,
determines at what point it ceases to be willing to compro-
mise. See H.K. Porter Co., 397 U.S. at 103-04; NLRB v.
McClatchy Newspapers, 964 F.2d 1153, 1163 (D.C. Cir. 1992).
This is especially appropriate where, as here, the negotiations
were conducted by experienced participants who were inti-
mately familiar with the intricacies of the bargaining process
and whose relationship spanned more than a decade.
Second, the record does not support the Board's conclusion
that "the parties did not have a contemporaneous understand-
ing that they were at impasse." Cotter & Co., 331 N.L.R.B.
No. 94, slip op. at 2. Taft identifies "the contemporaneous
understanding of the parties as to the state of the negotia-
tions" as a "factor[ ] to be considered in deciding whether an
impasse in bargaining existed." Taft Broad. Co., 163
N.L.R.B. at 478. "If either negotiating party remains willing
to move further toward an agreement, an impasse cannot
exist: the parties' perception regarding the progress of the
negotiations is of central importance to the Board's impasse
inquiry." Teamsters Local 639, 924 F.2d at 1084. A "con-
temporaneous understanding" as to impasse does not, howev-
er, require the parties to reach mutual agreement "as to the
state of the negotiations"; rather, each party must indepen-
dently, and in good faith, believe that it is "at the end of [its]
rope." PRC Recording Co., 280 N.L.R.B. at 635. An appli-
cation of this Taft criterion, which the Board emphasized,
reinforces, rather than negates, the existence of an impasse,
because nothing in the record indicates that the Company had
not bargained to its fullest capacity. Furthermore, the Un-
ion's "conduct" on which the Board relies--the Union's self-
serving statement on August 29 that the parties were not at
impasse and the Union's vacuous request on August 31 for
additional meetings--is insufficient to demonstrate the Un-
ion's desire to pursue further negotiations.
Absent conduct demonstrating a willingness to compromise
further, a bald statement of disagreement by one party to the
negotiations is insufficient to defeat an impasse. A contrary
result would render the "contemporaneous understanding"
Taft factor meaningless. Similarly, a vague request by one
party for additional meetings, if unaccompanied by an indica-
tion of the areas in which that party foresees future conces-
sions, is equally insufficient to defeat an impasse where the
other party has clearly announced that its position is final.
Indeed, as the court noted in addressing the breaking of an
impasse, "[t]he Board itself has indicated that a party's 'bare
assertions of flexibility on open issues and its generalized
promises of new proposals [do not clearly establish] any
change, much less a substantial change' in that party's negoti-
ation position." Serramonte, 86 F.3d at 233 (quoting Civic
Motor Inns, 300 N.L.R.B. 774, 776 (1990)). Even if in the
pre-impasse context the Union does not have to offer "a
substantial change" in its position, the Union's immediate and
definitive rejection of the Company's Final Offer suggests
circumstances not unlike those relied upon by the Board in
Seattle-First National Bank in concluding that the contempo-
raneous understanding of the parties supported a finding of
impasse. See Seattle-First Nat'l Bank, 267 N.L.R.B. at 898-
99. In addition, the Union declined to submit the Final Offer
to a vote of the unit employees. See Cotter & Co., 331
N.L.R.B. No. 94, slip op. at 9. Furthermore, although on
notice as a result of the Company's earlier signal about the
language it would use to identify its final offer, the Union at
no time indicated that it was ready to move on any issue that
the parties had discussed. Rather, the parties remained far
apart on the issues of exceptional importance--wages, health-
care, holidays, and work week. See Taft Broad. Co., 163
N.L.R.B. at 478. Under the circumstances, the record evi-
dence points to no conduct indicating the Union's belief that
further negotiations would be fruitful. Cf. Serramonte, 86
F.3d at 233.
The Board distinguished NLRB v. H & H Pretzel Co., 831
F.2d 650 (6th Cir. 1987), on the ground that both the Compa-
ny and the Union had indicated flexibility in the last two days
of negotiations and thus were not "similarly committed to
maintaining plainly irreconcilable positions." Cotter & Co.
331 N.L.R.B. No. 94, slip op. at 2. In H & H Pretzel, the
employer had made clear to the union that it had to achieve
substantial labor cost savings in order to survive. After three
bargaining sessions, however, the union continued to insist on
wage increases. See 831 F.2d at 652, 656. Notwithstanding
the brief period of negotiations, the Sixth Circuit affirmed the
Board's finding that "the union's expressed willingness to
continue talks was a mere token offer" made simply to delay
the inevitable imposition of wage reductions. Id. at 656-57.
This characterization of the union's efforts was reinforced by
the fact that "the union was on notice, prior to the last
negotiation session, of the company's commitment to cutting
labor costs [to address its financial concerns]." Id.In distinguishing H&H Pretzel, the Board ignored two
marked similarities between the two cases. First, as in H&H
Pretzel, the Company from the outset put the Union on notice
that it sought to address significant concerns about competi-
tiveness and productivity by substantially modifying the par-
ties' bargaining agreement. See supra note 2. To this end,
the negotiations period was lengthier than usual. As in H&H
Pretzel, although the parties demonstrated flexibility in bar-
gaining, they remained far apart on significant issues. See
H&H Pretzel, 831 F.2d at 656-57. Second, as in H&H
Pretzel, "while the [U]nion sought to continue talks, it did not
offer a new proposal or indicate a willingness to compromise
further on any specific issue." Id. at 656. Although bargain-
ing proposals were exchanged, the Union resisted movement
in the Company's direction. On the eighth day of negotia-
tions, for example, the Union was continuing to ask for twice
the wage increases that the Company was offering, despite
the Company's position that employee inefficiencies did not
warrant such increases. See supra note 2. Unlike H&H
Pretzel, the Union refused even to submit the Company's
Final Offer to the unit employees for a vote. See 831 F.2d at
652.
In view of this record evidence, the Board's focus on the
abruptness of the Company's Final Offer, on the Union's
surprise upon receiving it, and on possible future concessions
by both parties misses the mark. See Cotter & Co., 331
N.L.R.B. No. 94, slip op. at 1-2; see also Serramonte, 86 F.3d
at 233. The bargaining positions of the parties, as expressed
by their experienced negotiators, indicate that the parties
were at impasse.
III.
The Company also challenges the Board's findings on em-
ployee discipline and the processing of grievances, and the
Board's remedial order. Regarding the implementation of
new work rules, the Company contends that the Union waived
its right to bargain on work rules when it conceded that, in
accord with the expired Agreement, the Company had the
authority to implement new rules, and that the Union's sole
remedy was to initiate grievance proceedings.11 See NLRB v.
United States Postal Service, 8 F.3d 832, 836-37 (D.C. Cir.
1993); Haddon Craftsman, 300 N.L.R.B. 789, 790-91 (1990);
Jim Walter Res., Inc., 289 N.L.R.B. 1441, 1442 (1988). Thus,
the Company contends, because the work rules allowed it to
determine the appropriate disciplinary measures for any vio-
lation, it lawfully disciplined employees Gonzalez, Martin, and
Csongedi. Although both parties raised before the Board the
issue of waiver concerning the implementation of new work
rules, the Board failed to address this argument in its deci-
sion. Instead, the Board focused on its finding of no impasse
and summarily concluded that the absence of an impasse
rendered unlawful the Company's modification of work rules
and any consequent employee disciplinary action. See Cotter
& Co., 331 N.L.R.B. No. 94, slip op. at 2-4. It follows from
our holding on impasse that the Company lawfully imple-
mented its Final Offer, including the amended work rules
that led to the discipline of the employees. See Katz, 369
U.S. at 742-43; Taft Broad. Co., 163 N.L.R.B. at 478. There-
__________
11 Under the expiring agreement, the Company had the right to
implement work rules and quality and productivity standards unilat-
erally; the Union, in turn, had the right to grieve the reasonable-
ness of the rules through an established grievance and arbitration
procedure. On September 22 (after implementing its Final Offer),
the Company amended its Work Rule 5 to classify a failure to work
overtime as a work rule violation, subject to immediate discipline
under the Company's progressive disciplinary system.
fore, we grant the petition as to the work rules and subse-
quent disciplinary actions.
Regarding the grievance procedure, the Company concedes
that it abandoned the formal procedure established by the
Agreement, but maintains that its obligation to process griev-
ances, see Hilton's Envt'l, Inc., 320 N.L.R.B. 437, 454 (1995),
was adequately satisfied by "the Company's willingness to
discuss grievances at the highest levels rather than rote
processing at each lower grievance step." Further, the Com-
pany maintains that a grievance form signed by the Union is
evidence that the Company did not bypass the Union in
settling a grievance with one employee. These contentions
are meritless. The Board's finding that the Company acted
unlawfully in refusing to process grievances is supported by
substantial evidence. Despite the Company's position that its
new approach was superior, the Company was not free to
replace unilaterally the contractual grievance procedure. See
NLRB v. United Nuclear Corp., 381 F.2d 972, 977-78 (10th
Cir. 1967); Hilton's Envt'l, Inc., 320 N.L.R.B. at 454. Fur-
thermore, substantial evidence supports the Board's finding
that the Company's direct dealings with an employee violated
s 8(a)(1) and (5) of the Act. See Medo Photo Supply Corp. v.
NLRB, 321 U.S. 678, 684 (1944); Toledo Typographical Un-
ion No. 63 v. NLRB, 907 F.2d 1220, 1222 (D.C. Cir. 1990).
That the Union signed the grievance form in question indi-
cates the Union's involvement in the filing of the grievance,
not the Union's participation in the resolution of the griev-
ance. The Company's alternative contention for upholding its
unilaterally imposed grievance procedure, "no harm, no foul,"
was not presented to the Board, and hence is not properly
before the court. See 29 U.S.C. s 160(e); Woelke & Romero
Framing, Inc. v. NLRB, 456 U.S. 645, 665-66 (1982); Alwin
Mfg. Co., Inc. v. NLRB, 192 F.3d 133, 143 (D.C. Cir. 1999).
Finally, the Company maintains that the Board's remedial
order appears to be "penal" or "confiscatory" because by
requiring a return to the status quo ante it would require the
Company to make contributions on behalf of all employees to
the Teamsters Fund, despite the Final Offer's inclusion of the
Company's health plan as an option for employees.12 See
Carpenter Sprinkler Corp. v. NLRB, 605 F.2d 60, 67 (2d Cir.
1979). Because a number of employees have selected the
Company's health plan, the Company contends that a manda-
tory contribution to the Teamsters Fund "would not serve the
remedial purposes of the Act, would be a windfall for the
Fund, and would be a penalty on the Company which has
already paid any health care claims for these individuals."
Consequently, the Company seeks modification of the Board's
order either to eliminate the requirement for payment of
contributions to the Teamsters Fund for employees who have
disclaimed interest in that Fund or at least to allow for a
proper set-off. We remand this issue for consideration by the
Board. See Grondorf, Field, Black & Co. v. NLRB, 107 F.3d
882, 888 (D.C. Cir. 1997); Manhattan Eye, Ear & Throat
Hospital v. NLRB, 942 F.2d 151, 160 (2d Cir. 1991).
Accordingly, we grant the petition in part, deny the petition
in part, and remand in part.
__________
12 The Board's remedial order required the Company, in rele-
vant part, to (1) cease and desist from specified unfair labor
practices; (2) bargain in good faith with the Union; (3) rescind all
unilaterally implemented terms and conditions of employment upon
the Union's request; (4) cancel and rescind discipline issued pursu-
ant to the new rules; and (5) make whole those employees who lost
wages as a result of the unlawful discipline, and offer reinstatement
to unlawfully discharged employees. See Cotter & Co., 331
N.L.R.B. No. 94, slip op. at 5, 19-20; see also 29 U.S.C. s 160(c).