Fifth Circuit Upholds NLRB’s Decision Regarding Alleged Labor Negotiations Impasse

The Fifth Circuit has partially upheld a National Labor Relations Board (NLRB) order after finding an employer engaged in bad faith labor negotiations.  In Carey Salt Co. v. NLRB, No. 12-60757 (November 21, 2013), a rock salt mine company operating in Louisiana, Carey Salt, began collective bargaining negotiations to replace an expiring agreement with the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union and Local Union 14425 (“the Union”).  The existing agreement was set to expire on March 24^th and the parties met to negotiate a new contract 14 times between February 8^th and March 19th.

During negotiations, Carey Salt twice alleged the parties reached an impasse and unilaterally implemented its own offers despite Union protests.  On March 19th, Carey Salt presented a final offer at the request of the Union.  The offer apparently included items the parties previously agreed upon but omitted several important terms.  According to the Union, the final offer was requested to provide a basis on which to continue negotiations.  On March 24th, the Union voted to reject the offer and the existing agreement was extended to March 31st.  At that time, the Union again voted to reject Carey Salt’s March 19^th offer and the company ceased negotiations before unilaterally implementing it.

On April 7^th, the Union voted to strike.  Approximately three weeks later, a federal mediator successfully revived negotiations and Carey Salt presented a revised final offer to the Union.  On May 6^th, the Union voted to reject the revised offer and continue to strike.  A few weeks later, Carey Salt submitted yet another offer to the Union.  The new offer removed several concessions and the seniority-based system previously used to recall striking workers.  Although negotiations continued, Carey Salt reportedly rejected several Union proposals and insisted the Union accept the company’s most recent offer.

The Union ended its strike on June 15^th and Carey Salt began recalling workers based upon a new merit-based system.  Carey Salt then provided the Union with a new offer on June 23^rd.  After the Union refused to vote on the new offer, Carey Salt again claimed the parties reached an impasse and unilaterally implemented the offer.  The Union responded by filing an unfair labor practice charge with the NLRB.

An administrative law judge (“ALJ”) held that Carey Salt violated Sections 8(a)(1), 8(a)(3), and 8(a)(5) of the National Labor Relations Act (“the Act”).  The NLRB then adopted the ALJ’s findings with modifications.  As part of the order, Carey Salt was directed “to restore terms and conditions of employment to their pre-March 31 status until agreement or valid impasse is reached, make whole employees who suffered losses as a result of the March 31 implementation or the company’s failure to reinstate strikers, and post at the mine copies of a notice explaining the company’s obligations.”  The company was also ordered to cease and desist from presenting regressive bargaining proposals for the purpose of frustrating negotiations.  Carey Salt then filed a request for review with the United States Court of Appeals for the Fifth Circuit.  Additionally, the NLRB requested that the appellate court enforce its order.

The Fifth Circuit stated the five factors used to determine whether an impasse exists include:

(1) the parties’ bargaining history; (2) the parties’ good faith; (3)the duration of negotiations; (4) the importance of issues generating disagreement; and (5) the parties’ contemporaneous understanding of the state of negotiations.  Taft Broad. Co., 163 N.L.R.B. 475, 478 (1967), enforced sub. nom Am. Fed’n Television & Radio Artists v. NLRB, 395 F.2d 622(D.C. Cir. 1968).

The court added, however, that “substantial evidence of a lack of good faith must preclude an impasse finding.”

Despite that “the parties enjoyed a forty-year history of successful negotiations, and there was no complaint of bad faith in the instant negotiation prior to Carey Salt’s March 31 implementation,” the Fifth Circuit concluded there was sufficient evidence to establish Carey Salt acted in bad faith.  According to the appeals court,

Although there is substantial evidence that Carey Salt’s conduct fell short of good faith during the week leading up to March 31, we recognize its good-faith efforts throughout most of this negotiation. Nonetheless, good-faith bargaining is a “necessary precondition” to reaching valid impasse. Elec. Mach., 653 F.2d at 963. In determining whether this precondition is satisfied, we do not think that the Board or this court must balance the entirety of conduct in negotiations to determine whether certain bad-faith conduct is outweighed by other indications of good faith, thereby redeeming a party’s “net” good-faith score. Taft provides that parties reach impasse only after “good-faith negotiations have exhausted the prospects of concluding an agreement,” and we understand such “exhaust[ion]” to mean that good-faith efforts must persist until all avenues for compromise are closed. Taft Broad., 163 N.L.R.B. at 478 (emphasis added). The Act itself sets a high bar and requires parties in collective bargaining to “confer in good faith.” 29 U.S.C. § 158(d). We decline today to create a new exception to this duty that would apply after a number of weeks of bargaining, when an employer, weary of discussion, finds it more convenient to declare impasse rather than honor the parties’ stated plans to make another genuine attempt to seek common ground.

The Fifth Circuit held,

Having reviewed the record, we conclude that substantial evidence supports the Board’s finding that Carey Salt acted in bad faith leading up to its impasse declaration on March 31. Good faith bargaining is a prerequisite to achieving a valid impasse. Elec. Mach., 653 F.2d at 963. Accordingly, we hold that substantial evidence on the record considered as a whole supports the Board’s finding that on March 31, in the absence of a valid impasse, Carey Salt unilaterally implemented changes to terms and conditions of employment.

However, we hold that substantial evidence does not support the Board’s finding that the regressive March 19 proposal was “part of [Carey Salt’s] overall plan to frustrate agreement.” The link to Carey Salt’s plan is too conjectural, and no feature of the March 19 offer or its context suggests bad-faith bargaining.

Next, the appeals court addressed the second alleged impasse,

Carey Salt’s claims regarding the June 27 implementation are without merit. As noted above, the Board pointed to a shorter negotiations period and the Union’s willingness to continue bargaining on open issues. Furthermore, the Board’s uncontested reliance on Carey Salt’s earlier bad faith was permissible. As the Board noted, previous bad-faith conduct does not automatically preclude a later finding of good-faith impasse, but in certain cases, unilateral changes can “move the baseline for negotiations” and “alter the parties’ expectations about what they can achieve,” thereby frustrating the bargaining process. Id. at 24 (quoting Alwin Mfg. Co., Inc. v. NLRB, 192 F.3d 133, 139 (D.C. Cir. 1999)). In this case, such spillover effects are evident in the record, found in the Union negotiator’s direct references to the March 31 unlawful implementation in his protestations of Carey Salt’s new assertions of impasse. Id. at 25. Finally, Carey Salt does not challenge the Board’s findings that certain implemented terms were never offered in negotiations, and such findings are based directly on the Union negotiator’s testimony on this matter. See Tr. at 407-411.

Accordingly, we hold that substantial evidence on the record considered as a whole supports the Board’s no-impasse determination regarding the June 27 implementation, and we enforce the relevant portions of the order.

Despite Carey Salt’s bad faith, the Court of Appeals found that there was insufficient evidence to support the NLRB’s conclusion that the company intentionally made regressive bargaining proposals.  Because of this, the Fifth Circuit upheld the entirety of the NLRB’s order except for the provision that required Carey Salt to cease and desist from presenting bargaining offers designed to frustrate labor negotiations.