Emery Worldwide, A.C.F. Co. v. N.L.R.B.

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 22, 1992
• Docket: 91-4617
• Status: Published

Opinion

United States Court of Appeals,

Fifth Circuit.

No. 91–4617.

EMERY WORLDWIDE, a C.F. COMPANY, Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD, Respondent.

July 24, 1992.

Petition for Review of an Order of the National Labor Relations Board

Before BROWN, GARWOOD and EMILIO GARZA, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

The sole issue before us is whether the Union violated Sections 8(b)(1)(A) and 8(b)(3) of the

National Labor Relations Act (NLRA) by seeking a merger of two bargaining units via the arbitration

process. Because the Union's objective was illegal, we hold that it violated the NLRA.

In June, 1987, Emery Air Freight acquired Purolator Courier Corporation. For at least fifteen

years, Emery route employees (employees who pick up and deliver freight), called territorial

representatives, had been represented by a collective bargaining agreement between Emery and

Teamsters Local Union No. 9881 (Local 988 or the Union). At the time of the Purolator acquisition,

the territorial representatives were covered by an agreement effective from December 1, 1985 to

November 30, 1988.

In October, 1988, Emery recognized Local 988 as the collective bargaining agent for the

Purolator route employees, called courier guards. The responsibilities of the Purolator courier guards

were similar to those of the Emery territorial representatives, except that the courier guards also

performed other duties. Negotiations between Emery and Local 988 resulted in a collective

1 The unshortened title of the Teamsters is the "International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL–CIO." bargaining agreement covering the Purolator courier guards from November 2, 1988 to November

2, 1991. At no time during these negotiations did Local 988 seek either a joint contract to cover both

Emery territorial representatives and Purolator courier guards or coverage for Purolator employees

under the existing Emery agreement.

In the Fall of 1988, Emery combined the Purolator and Emery terminals in Houston.

Members of both collective bargaining units worked at each terminal and shared the same terminal

manager, dispatchers, and supervisors. By agreement of the parties, the contract covering the Emery

territorial representatives was extended beyond November 30, 1988 on a day-to-day basis.

On April 17, 1989, Consolidated Freightways, Inc. purchased Emery and its wholly-owned

subsidiary Purolator, and from that time forward, Emery and Purolator operated under a single logo

of "Emery Worldwide, a C.F. Company" (Emery Worldwide). They used a single waybill and

overnight package for all transportation of freight. Although Emery and Purolator still followed

different routes in Houston pursuant to their respective agreements, there was complete interchange

of vehicles (except line haul vehicles), and Emery territorial representatives could pick up from and

delivery to customers who previously had been Purolator customers (and vice versa). However,

under their respective collective bargaining agreements, the Emery territorial representatives

(approximately 47 employees) and the former Purolator courier guards (approximately 70 employees)

continued to maintain separate seniority lists and starting times and were subject to different wages,

benefits, job classifications and layoff procedures. No transfers between the two units occurred.

Indeed, in December, 1989, when Emery temporarily used a Purolator unit employee to substitute

for an absent Emery unit employee, Local 988 filed and eventually won a grievance prohibiting such

substitutions.

In negotiations with Emery Worldwide in the Fall of 1989, Local 988 sought to cover the

Emery and former Purolator route employees in Houston under one collective bargaining agreement. These negotiations led to the filing of a grievance by Local 988 on October 2, 1989. The grievance

sought application of the extended 1985–1988 Emery contract to the former Purolator courier guards

on the ground that the operations of Emery and Purolator had been merged. The Emery contract

contained wage and hours terms more favorable to employees than those in the Purolator contract.

Emery Worldwide denied the grievance on October 11, 1989, citing a provision of the Emery

contract that excluded "[e]mployees already covered by an existing Union Agreement." Local 988

demanded arbitration on December 7, 1989.

Emery Worldwide then commenced this proceeding by filing an unfair labor practice charge

with the NLRB, alleging that Local 988 was attempting through the grievance-arbitration process to

force the merger of two historically separate bargaining units, in violation of Sections 8(b)(1)(A) and

8(b)(3) of the NLRA. Section 8(b)(1)(A) prohibits a labor organization from restraining or coercing

employees in the exercise of their rights guaranteed by § 7. Section 7 includes the rights to form and

join a labor organization, to bargain collectively through representatives of their own choosing, and

to refrain from joining a labor organization. 29 U.S.C. §§ 157, 158(b)(1)(A). Section 8(b)(3)

prohibits a labor organization from refusing to bargain collectively with the employer. 29 U.S.C. §

158(b)(3).

The ALJ agreed with Emery Worldwide, finding that there were two separate and distinct

collective bargaining units, and that Local 988 could not force upon Emery Worldwide an

enlargement or merger of an existing bargaining unit. On June 10, 1991, the NLRB reversed and

dismissed Emery Worldwide's complaint, finding that Local 988's objective was not to compel a

merger, but instead to simply obtain a declaration that the two units had already been merged by

Emery Worldwide, entitling the former Purolator employees to rights under the Emery contract.

Because Local 988 had raised a bona fide contractual issue, the three-member NLRB panel thus held

that its grievance and arbitration request could not constitute unlawful restraint or coercion under the

NLRA. 303 N.L.R.B. No. 41, 137 L.R.R.M. 1225 (1991). Emery brings this appeal. Express to the Federal Question: Was Merger via Arbitration Illegal?

We must uphold the Board's decision if it is "reasonably defensible," Ford Motor Co. v.

N.L.R.B., 441 U.S. 488, 497, 99 S.Ct. 1842, 1849, 60 L.Ed.2d 420 (1979), and if it is supported by

substantial evidence. N.L.R.B. v. General Truckdrivers, 778 F.2d 207, 213 (5th Cir.1985) (citing

Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951)). We

conclude that the NLRB has failed to meet either standard.

In a long line of cases, the NLRB has clearly ruled that after agreeing to distinct collective

bargaining units, a union may not through the arbitration dispute-settlement mechanism force their

merger. Chicago Truck Drivers (Signal Delivery), 279 N.L.R.B. 904, 122 L.R.R.M. 1100 (1986);

Service Employees Int'l Union Local 32 B–32J, 258 N.L.R.B. 430, 108 L.R.R.M. 1157 (1981);

IBEW Local 323, 242 N.L.R.B. 305, 101 L.R.R.M. 1179 (1979); Utility Workers Union Local 111,

203 N.L.R.B. 230, 83 L.R.R.M. 1099 (1973). Of course, the Board may jettison its own precedents

if it has "adequately explicated the basis of its [new] interpretation." See N.L.R.B. v. J. Weingarten,

Inc., 420 U.S. 251, 267, 95 S.Ct. 959, 968–69, 43 L.Ed.2d 171 (1975). An administrative agency

is not allowed to change direction without sufficient explanation of what it is doing and why. See

Motor Vehicle Mfr. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 57, 103 S.Ct. 2856, 2874,

77 L.Ed.2d 443 (1983); see also International Ass'n of Bridge Workers Local No. 111 v. N.L.R.B.,

792 F.2d 241, 247–48 (D.C.Cir.1986) and International Union, UAW v. N.L.R.B., 802 F.2d 969, 974

(7th Cir.1986). Here, the Board fails to offer any or a sufficient basis for departing from its past

consistent decisions.

This case is almost identical to Chicago Truck Drivers. 279 N.L.R.B. 904, 122 L.R.R.M.

1100 (1986). There, both Signal and LTI were controlled by the same holding company. Signal had

four facilities in the Chicago area from which it hauled freight primarily for Sears.2 LTI, operating

2 These four facilities included two "home delivery" operations, one "city shuttle" operation and a fourth facility engaged in the business of interstate hauling. out of Elmhurst, Illinois, had a "home delivery" service and a "general cartage" division. Among

other things, it provided drivers for Signal's "city shuttle" service in Chicago. Signal and LTI had

concurrent collective bargaining agreements with the union covering separat e units of employees.

Each unit was covered by a separate collective bargaining agreement and each unit had a separate

seniority list. "Bumping"3 was forbidden. The union filed a grievance seeking to merge the units.

Specifically, the union wanted one contract covering its employees providing service to Sears and

contended that the three seniority lists should be combined into one. After the grievance committee

became deadlocked, the union demanded arbitration. Signal and LTI refused to participate in the

arbitration and LTI filed a charge with the NLRB, alleging violations of the NLRA. The NLRB

found in favor of LTI, stating that the enlargement of a bargaining unit was not a mandatory subject

of bargaining under the NLRA and that the Union's use of the grievance-arbitration procedure for this

purpose violated Sections 8(b)(1)(A) and 8(b)(3) of the Act. The NLRB reasoned that the union was

"seeking to force, through arbitration, the merger of historically separate "bargaining' units,"

constituting an "illegal objective" under federal law. 279 N.L.R.B. at 907.

The NLRB most recently dealt with the "illegal objective" issue in Local 776, Int'l Bhd. of

Teamsters, 305 N.L.R.B. No. 114 (Dec. 11, 1991), pet. for review pending, No. 92–3000 (3d Cir.).

In this case, the Board held that a union violated the NLRA by continuing to seek enforcement of an

arbitration award because the union's suit had an "illegal objective." The union sought through

arbitration to apply its collective-bargaining agreement to employees whom the Board had already

determined to be outside the bargaining unit. Because the Board found that the union insisted, via

the filing of a lawsuit, on bargaining for a change in the scope of the existing bargaining unit, it held

that the lawsuit fell within the "illegal objective" exception to the Bill Johnson's case,4 thus

3 To "bump" an employee is to transfer that employee from one unit to another with full seniority rights. 4 In Bill Johnson's Restaurants v. N.L.R.B., 461 U.S. 731, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983), the Supreme Court held that a lawsuit could be condemned as an unfair labor practice if two conditions were met: (1) the suit had a retaliatory motive; and (2) the lawsuit lacked a reasonable basis in fact or law. The Court, however, specifically refused to apply this restrictive constituting an unfair labor practice in violation of Section 8(b)(3) of the Act, and restrained and

coerced employees in violation of Section 8(b)(1)(A). Here, as in Chicago Truckdrivers, supra, the

Emery and Purolator units had separate seniority lists and separate benefits, and there were no

transfers between the two units. Moreover, when a Purolator unit employee substituted for an absent

Emery unit employee, the Union successfully filed a grievance. The Union can not now seriously in

good faith urge this court that the two units were effectually merged into one bargaining unit.

Clearly, the units were two separate and distinct bargaining units.5 Although the Board found a bona

fide contractual issue with respect to whether a merger in effect had occurred, we are not persuaded

by its characterization. Rather, we agree with the ALJ that the Union attempted unlawfully to force

the merger of two historically separate bargaining units via the arbitration process. 6 The Union

sought to have an arbitrator declare "that all affected employees be made whole and that the Emery

Worldwide contract cover all bargaining unit employees." We conclude that the Union's use of the

arbitration process for this purpose constitutes an illegal objective and thus violates Sections

8(b)(1)(A) and 8(b)(3) of the Act, because in the words of the Supreme Court, "The law compels a

party to submit his grievance to arbitration only if he has contracted to do so." Litton Fin. Printing

Div. v. N.L.R.B., ––– U.S. ––––, ––––, 111 S.Ct. 2215, 2222, 115 L.Ed.2d 177, 193 (1991). In

response, the Board relies upon General Teamsters Union Local 483 (Ida Cal Freight Lines), 289

N.L.R.B. 924, 130 L.R.R.M. 1277 (1988) to support its decision. In Ida Cal, the issue was whether

an existing collective bargaining agreement covered employees whose status was unclear. The union

argued that certain employees were covered under their collective-bargaining agreement, while the

test to situations (1) where the law suit was preempted by the NLRA; or (2) where the lawsuit had an illegal objective under federal law. (Emphasis added.) In either of these two cases, the Court stated that the legality of the lawsuit enjoys no special protection under Bill Johnson's. 5 Both parties fully agree that this case does not involve the accretion doctrine. Accretion occurs when a group of new employees are added to an existing bargaining unit. See N.L.R.B. v. Stevens Ford, Inc., 773 F.2d 468, 473 (2d Cir.1985). In this case, both the Purolator and Emery units had each formed separate bargaining units. 6 Even if we adopt the Union's characterization, i.e., that they merely requested the arbitrator to determine whether a merger had already occurred, an arbitrator is without power to merge separate units. An ordered merger of two distinct bargaining units is illegal and in contravention of past NLRB decisions. employer contended otherwise on the basis that they were independent contractors. The union in Ida

Cal filed a grievance, and requested arbitration to resolve whether the employees in dispute were

covered by the collective-bargaining agreement. Although the Board found no violation of the

NLRA, the Ida Cal case is easily distinguishable from this case. Here, there was clearly two separate

bargaining units governed by two separate collective bargaining agreements. The Union does not in

any way suggest that the status of either group was ambiguous. To the contrary, the Union recently

filed and won a grievance based largely on the distinctiveness and separateness of the two bargaining

units when a one Purolator employee was used temporarily to replace an Emery employee.

Lastly, the Board attempts to persuade this court that the strong national policy favoring

arbitration requires us to uphold its ruling in favor of the Union, citing Carey v. Westinghouse Elec.

Corp., 375 U.S. 261, 84 S.Ct. 401, 11 L.Ed.2d 320 (1964). While we recognize the benefits of

arbitration and advocate its use, we reiterate that we can not ignore clear Supreme Court authority

which dictates that arbitration is strictly a creature of contract. Litton Fin. Printing Div. v. N.L.R.B.,

––– U.S. at ––––, 111 S.Ct. at 2224, 115 L.Ed.2d at 195. Simply put, this means that "a party cannot

be required to submit to arbitration any dispute which he has not agreed so to submit." United

Steelworkers v. Warrior and Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4

L.Ed.2d 1409 (1960). Our examination of whether the parties agreed to arbitrate the merger issue

leads us to the conclusion that no such agreement was ever contemplated, thus making the Union's

arbitration demand unlawful in violation of the NLRA.7

Accordingly, we hold that the Union's attempt to have the Purolator employees brought within

the Emery contract is clearly an "illegal objective." The NLRB has so significantly departed from the

principles of its past decisions, let alone the decisions of this and other courts, as to necessitate a

reversal of its decision under review and the rendering of a ruling in favor of Emery Worldwide.

7 The only method by which the Union could have lawfully achieved its objective would be through an NLRB unit clarification proceeding. Indeed, even the NLRB concedes in its brief that a unit clarification proceeding was an obvious option available to the Union. ENFORCEMENT OF ORDER DENIED.