Honeywell International, Inc. v. National Labor Relations Board

253 F.3d 125, 346 U.S. App. D.C. 421, 167 L.R.R.M. (BNA) 2545, 2001 U.S. App. LEXIS 14398
Court of Appeals for the D.C. Circuit·Decided June 29, 2001·No. 00-1171·Published·Cited by 15 cases

Opinion

Opinion for the Court filed by Chief Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Chief Judge:

Honeywell International Inc. (“Honeywell”) petitions for review from a decision of the National Labor Relations Board (“NLRB” or “Board”) holding that the company violated §§ 8(a)(1) and (5) of the National Labor Relations Act (“NLRA” or “Act”) by unilaterally terminating severance benefits allegedly owed to bargaining unit employees. In 1994, Honeywell purchased Textron’s military and commercial engine manufacturing operations at the Stratford Army Engine Plant in Stratford, Connecticut. At the time of the sale, Honeywell assumed the collective bargaining agreements that had been executed by Textron and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW” or “Union”), and its Local 376 and Local 1010. The collective bargaining arrangement consisted of a core agreement, a Competitiveness Agreement (“CA”), covering relocation decisions, and an Effects Bargaining Agreement (“EBA”), covering insurance, pension, severance, and other such benefits to deal with the economic impact and effects of a potential sale of Textron assets. At issue before us is whether the severance benefits under the EBA were subject to the rule enunciated in NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962).

Pursuant to Katz, it is generally held that, absent impasse or waiver, “an employer’s unilateral change during the course of a collective bargaining relationship of a matter that is a mandatory subject of bargaining is a per se violation of the [NLRA].” The Developing LaboR Law 266-69 (Christopher T. Hexter et al., eds., 3d ed.1999 Cumulative Supplement). “The Katz doctrine has been extended as well to cases where, as here, an existing agreement has expired and negotiations on a new one have yet to be completed.” Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 198, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991). Severance pay is indisputably a mandatory subject of bargaining; it was an established term of employment under the parties’ EBA; and it is not among the categorical exceptions to the Katz rule noted in Litton. It is therefore clear that *128 Honeywell was barred from unilaterally terminating severance benefits at the expiration of the EBA, absent an impasse in bargaining with the Union or a waiver by the Union of the right to claim severance benefits on behalf of bargaining unit employees. The Board properly found no exception to the Katz rule in this case.

In challenging the Board’s decision, Honeywell contends, first, that the “contract coverage” doctrine should trump the unilateral change doctrine in this case. In other words, Honeywell argues that, by the terms of the parties’ agreement, severance benefits expired with the termination of the EBA. This argument fails, because severance benefits in the EBA are not limited to a time certain. The EBA contains a contract duration clause at the end of the document. Under Katz, however, an expiration date in a standard contract duration clause cannot defeat the unilateral change doctrine. Indeed, as the Court made clear in Litton, the Katz rule often presupposes the end of a collective bargaining agreement and guarantees the continuation of existing benefits as a matter of law. To hold that a general contract duration clause “covers” and vitiates a Union’s statutory claim to continued status quo benefits, would be to drain the unilateral change doctrine of any coherent meaning.

Honeywell also claims that the express terms of the EBA clearly and unmistakably waived any right to post-expiration eligibility for severance. We agree with the Board that this argument fails. Honeywell’s final argument, suggesting that this dispute should have been settled in arbitration, is foreclosed by 29 U.S.C. § 160(e).

Accordingly, we deny Honeywell’s petition for review of the Board’s order.

I. Background

In 1993, Honeywell, known at the time as Allied Signal, entered into negotiations to purchase Textron Inc., which produced mainly helicopter and tank engines for military and commercial purposes at the Stratford Army Engine Plant in Stratford, Connecticut. In 1994, Textron began negotiating new collective bargaining agreements with the UAW and its Local 376 and Local 1010. Although Textron owned the business at the time of the labor negotiations, Honeywell committed to adopting the agreements if they were competitive. AlliedSignal Aerospace, 330 N.L.R.B. No. 176 at 4 (Apr. 12, 2000).

After Honeywell and Textron announced the intended sale, the Union demanded to bargain over the effects on bargaining unit employees. Transcript (Oct. 6, 1998), reprinted in J.A. 98. Formal negotiations over the EBA took place between May 20 and July 13, 1994. During these negotiations, “the Union gave Textron an ‘Effects Proposal’ which included severance pay calculated on the basis of 40 hours of [pay] for each year of employment, with a graduated payment scale based on [an employee’s] number of years of service.”Allied-Signal Aerospace, at 4. The severance proposal was tied to a Supplementary Unemployment Benefit Plan (“SUB”) that was in existence in the parties’ expiring collective bargaining contract. Id. In the past, money in the SUB “had run out because of the large number of layoffs in 1991 and 1992. The union team was looking for an alternative to the SUB plan and thus [was] interested in working out a severance program.” Id. at 5.

As a part of its Effects Proposal, the Union suggested that employees laid off because of the sale or laid off in the three-year period before the sale, and impacted by the sale, should be eligible for severance benefits. Effects Proposal (May 20, *129 1994), reprinted in J.A. 599-606. Textron responded on May 28 with a “declining balance” proposal. Under this plan, the employees laid off earliest would receive the greatest severance pay; the pay would gradually decrease over the period of the agreement, declining to zero benefits upon expiration of the EBA. AlliedSignal Aerospace at 5. This proposal also maintained a modified version of the SUB plan. Company Proposal (May 28, 1994), reprinted in J.A. 608-10. The employer’s plan stipulated that only employees who had worked at least one year prior to the sale and who were laid off as a direct result of a transfer of bargaining unit work would be eligible for severance benefits. Id. at 609.

The Union rejected the company’s proposal, because, under existing seniority rules, the most junior employees were laid off first and would therefore receive the most in severance benefits. AlliedSignal Aerospace at 5; Transcript (Oct. 6, 1998), reprinted in J.A. 150.

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Honeywell International, Inc. v. National Labor Relations Board, 253 F.3d 125, 346 U.S. App. D.C. 421, 167 L.R.R.M. (BNA) 2545, 2001 U.S. App. LEXIS 14398 (D.C. Cir. 2001).

253 F.3d 125 (Honeywell International, Inc. v. National Labor Relations Board) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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