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Tramont Manufacturing, LLC v. National Labor Relations Board

United States Court of Appeals, District of Columbia Circuit

May 29, 2018

Tramont Manufacturing, LLC, Petitioner
National Labor Relations Board, Respondent

          Argued March 5, 2018

          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.

          Before: Garland, Chief Judge, and Tatel and Millett, Circuit Judges.



         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.


         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 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, 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 NLRB 952, 954-55 (1988)), the 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 ...

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