United States Can Company v. National Labor Relations Board, United Steelworkers of America, Afl-Cio-Clc, Intervening

984 F.2d 864, 142 L.R.R.M. (BNA) 2313, 1993 U.S. App. LEXIS 1382

• Court: Court of Appeals for the Seventh Circuit
• Decided: January 28, 1993
• Docket: 92-1401 and 92-1714
• Status: Published

Opinions

EASTERBROOK, Circuit Judge.

Inter-American Packaging, Incorporated, is in the container business. One of its subsidiaries, United States Can Company, operated five packaging plants scattered throughout the United States when, in 1987, it acquired four additional plants from the “general packaging” division of Continental Can Company. Continental had a master agreement with the United Steelworkers of America, which represented many of its employees — and also represented the workers at U.S. Can’s plants. Continental’s master agreement, effective until February 1989, called for multi-plant bargaining (the NLRB had certified a mul-ti-plant unit) and gave workers laid off for more than 30 days or dismissed on the closure of a plant preference in hiring at other plants (the Inter-Plant Job Opportunity Program, which the parties call “IPJO”). '

Continental formed a subsidiary, CCC Series 200, Inc. (“Series 200”), to own the assets and liabilities of its general packaging plants. Inter-American formed a subsidiary that purchased the stock in Series 200. Next, U.S. Can was merged into Series 200. Inter-American’s subsidiary, having paid Continental the agreed consideration, dissolved, leaving Inter-American the sole stockholder in Series 200, which was immediately renamed United States Can Corporation. As a matter of corporate law, then, Series 200 acquired U.S. Can’s five plánts, and Inter-American acquired all of the stock in this nine-plant firm. Continental assumed all of the pension liabilities of its former subsidiary. Arranging the transaction in this way produced substantial tax benefits.

As one would expect, U.S. Can operated the four former Continental plants much as if nothing had happened. It did not tell the employees that they had to seek jobs with the new owner. There was no closing, and no new (immediate) owner — although there was a new parent corporation. Closing the plants and inviting applications for employment would have been not only inappropriate to the form of the transaction but also potentially costly. Treating the deal as a sale of assets could well have triggered severance pay and pension benefits connected with a shutdown. See Allied Industrial Workers Local 879 v. Chrysler Marine Corp., 819 F.2d 786 (7th Cir.1987).

Inter-American decided to apply its labor relations policies to the newly acquired plants. U.S. Can had generally friendly relations with labor but resisted multi-plant bargaining. Collective bargaining at U.S. Can’s original five plants proceeded plant-by-plant. When it took over the management of the four plants from Continental, U.S. Can invited local union officials to bargain. Letters sent on May 14, 1987, the day after the change in ownership, to the president of each local union said, in part:

[W]e need to meet as soon as possible to put in place a formal collective bargaining agreement with Local [number] of the U.S.W.A. As you are the bargaining representative for these new employees of U.S. Can Company at [plant], I request that we meet with you and your local plant bargaining committee at a mutually convenient time to discuss the terms and conditions of employment and negotiate a collective bargaining agreement between your union and U.S. Can Company. In the interim, the terms and conditions including wages, benefits and working conditions as they presently exist under the collective bargaining agreement with the Continental Can Company shall remain in effect.

Informed by representatives of the parent union that bargaining must occur in a mul-ti-plant unit, U.S. Can balked. Under instructions from the parent union, the presidents of the locals refused to bargain separately; no single-plant agreements were reached. Representatives of U.S. Can and the parent union met sporadically until August 20, 1987, after which they made no further efforts to bridge the gaps separating their positions. Inter-American’s insistence on separate bargaining also meant that U.S. Can refused to implement the Inter-Plant Job Opportunity Program, one of the features of a multi-plant unit. While the plants were under Continental’s ownership, the IPJO was a paper program. The administrative law judge wrote: “[BJefore the acquisition, IPJO was rarely invoked; only one such transfer occurred and that took place some 15 years ago.” The program has increased in significance because U.S. Can has closed three of the four plants acquired from Continental. Employees who sought preferential hiring elsewhere were told that “there is no such thing as IPJO for U.S. Can employees.” If U.S. Can had to continue the program until February 1989 (and thereafter until bargaining to impasse with the union), employees who could have been hired at the remaining plant would be entitled to jobs and back pay.

An administrative law judge determined that U.S. Can violated § 8(a)(5) and (1) of the NLRA, 29 U.S.C. § 158(a)(5) and (1), by refusing to bargain with the union in the multi-plant unit and refusing to implement the terms of the master agreement regarding the IPJO. Because only one of the original four plants remains, the multi-plant-unit question has no continuing importance. U.S. Can accepted the administrative law judge’s decision on that subject, the Board entered the recommended order, 305 N.L.R.B. No. 178 (1992), and we grant the Board’s request for summary enforcement on that question, which U.S. Can has not addressed in its briefs here.

Two subjects were contested before the Board: first, whether the charge was timely; second,. whether U.S. Can adopted the master agreement between the union and Continental. Not until October 1988 did the union file a charge specifically protesting the disappearance of the IPJO. The. Board concluded that this amended charge is “closely related” to and hence takes the date of the original charge in January 1988 complaining about U.S. Can’s refusal to recognize and bargain with a multi-plant unit. The January 1988 charge was itself timely—that is, filed within six months of the unfair labor practice, see § 10(b) of the Act, 29 U.S.C. § 160(b)—because not until August 20, 1987, did U.S. Can make clear that it would bargain only plant-by-plant.

Because the six months do not begin until “the victim of an unfair labor practice receives unequivocal notice of a final adverse decision”, Esmark, Inc. v. NLRB, 887 F.2d 739, 746 (7th Cir.1989) (italics in original), substantial evidence supports the Board’s selection of August 20 as the date on which, the claim accrued. Earlier dates could be justified, but the Board was not required to draw the inferences U.S. Can favors. It could, and did, treat the letters of May 14 and the handout of May 26 (discussed below), as a bargaining position, which did not ripen into an unfair labor practice until U.S. Can refused to recede. An amendment to a charge relates back to an earlier charge to which it is “closely related.” NLRB v. Overnite Transportation Co., 938 F.2d 815, 820-21 (7th Cir.1991); NLRB v. Complas Industries, Inc., 714 F.2d 729, 733 (7th Cir.1983); Redd-I, Inc., 290 N.L.R.B. 1115 (1988). Substantial evidence supports the conclusion that the refusal to bargain in a multi-plant unit and to implement the IPJO are but two manifestations of a single. decision taken by U.S. Can.

Thus we arrive at the only contested substantive issue: whether U.S. Can adopted the master agreement between Continental Can and the Steelworkers Union. This is how the Board phrased the question (to which it answered “Yes”). It is a surprising question, given the form of the transaction. Questions about adoption and the like arise when one firm acquires assets from another and hires the existing labor force. E.g., Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 107 S.Ct. 2225, 96 L.Ed.2d 22 (1987); NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). Only stock changed hands in the transaction by which Inter-American took control of these four plants. A sale of stock, like a merger, does not affect the contractual obligations of the corporation. United States Shoe Cory. v. Hackett, 793 F.2d 161 (7th Cir.1986). Investors may not look through their own corporate structure, recharacterize stock sales as asset sales, and pretend that workers whose employment is continuous “really” were hired afresh on the date of a merger. Although the General Counsel argued that there has been only one employer all along, neither the administrative law judge nor the Board thought it necessary to decide whether labor law distinguishes stock from asset transactions. We must assess the reasons the agency gave. SEC v. Chenery Corp., 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943). Although perplexed that the NLRB shuns straightforward corporate-law approaches to questions about corporate obligations, see NLRB v. International Measurement & Control Co., 978 F.2d 334, 338, 339 (7th Cir.1992), we proceed as if U.S. Can had purchased the assets of the four plants from Continental Can.

In concluding'that U.S. Can assumed the master agreement, including the IPJO, the Board relied principally on U.S. Can’s letters of May 14 and subsequent implementation of most terms of the existing pact. This infuriates U.S. Can, which expostulates that it told the union as bluntly as it knew how that it would not assume the master agreement. Two days before the merger, one of Continental’s managers sent the Steelworkers’ vice president Leon Lynch, whose portfolio includes the container industry, a draft of the acquisition agreement, which stated that U.S. Can was not assuming the master agreement. The letters of May 14 invite local negotiations only and declare that existing terms and conditions are being adopted only pending the conclusion of new collective bargaining agreements. At a meeting with Lynch on May 26, U.S. Can’s chief of labor relations distributed 11 pages of the final acquisition agreement, including § 6:03, which provides in part: “The Surviving Corporation does not agree to accept the terms of any master labor agreement. However, the Surviving Corporation shall provide the economic benefit levels presently in effect under the Collective Bargaining Agreements”. Indeed, the General Counsel’s complaint charges that U.S. Can committed an unfair labor practice by not accepting all terms of the master agreement. How is it, U.S. Can asks, that an employer can be found to have “assumed” a contract that it repeatedly told the union it wanted no part of?

Part of the Board’s answer is that federal law does not ape all features of the common law of contracts. Labor law contains an obligation to engage in good-faith bargaining, an obligation without counterpart in the law of contracts. The obligation to bargain entails an obligation to retain existing terms and conditions of employment until bargaining has reached an impasse. Litton Financial Printing Division v. NLRB, — U.S. -, -, 111 S.Ct. 2215, 2225, 115 L.Ed.2d 177 (1991); NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962). An employer taking over a unionized plant cannot set its own terms on a take-it-or-leave-it basis; at a minimum it must hire applicants without discrimination against union sympathizers and bargain with the employees’ chosen representative if the union retains a majority. Burns, 406 U.S. at 281, 92 S.Ct. at 1579; U.S. Marine Corp. v. NLRB, 944 F.2d 1305, 1315 (7th Cir.1991) (in banc). These and other departures from the model of contract may lead to obligations that employers did not voluntarily assume and strongly prefer to avoid.

A person acquiring a plant or business “is free, as a general rule, to determine the initial terms and conditions of employment.” U.S. Marine, 944 F.2d at 1315. See also Burns, 406 U.S. at 287-88, 92 S.Ct. at 1582. An employer that hires a majority of the old labor force must bargain with any union that represents the workers. Burns suggests a further possibility: “there will be instances in which it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees’ bargaining representative before he fixes terms.” 406 U.S. at 294-95, 92 S.Ct. at 1585-86. This obligation to consult does not necessarily imply that the incoming owner is stuck with the predecessor’s terms until bargaining breaks down. See Spruce Up Corp., 209 N.L.R.B. 194 (1974), enforced without opinion, 529 F.2d 516 (4th Cir.1975). Every court that has addressed the subject has held that this passage in Burns refers to negotiation and does not establish a substantive obligation to open one’s doors offering the predecessor’s terms. Saks & Co. v. NLRB, 634 F.2d 681, 687-88 (2d Cir.1980); Nazareth Regional High School v. NLRB, 549 F.2d 873, 881-82 (2d Cir.1977); Kallmann v. NLRB, 640 F.2d 1094, 1102-03 (9th Cir.1981); NLRB v. Dent, 534 F.2d 844 (9th Cir.1976); Machinists v. NLRB, 595 F.2d 664, 672-76 (D.C.Cir.1978). We sidestepped this question in U.S. Marine, see 944 F.2d at 1321-22 n. 22, and need not essay its resolution here, because the Board was entitled to find that U.S. Can did not avail itself of the privilege to set its own terms.

Instead of proclaiming independent terms on which it would hire labor, U.S. Can told each of the local unions that it would adopt “the terms and conditions including wages, benefits and working conditions as they presently exist under the collective bargaining agreement with the Continental Can Company” until new collective bargaining agreements were reached. Elements such as the IP JO are among the “terms and conditions” of employment. Simultaneously U.S. Can was telling the officials of the parent union something different—that it was picking and choosing among terms. An employer could do this. It could say, for example: “we offer all terms and conditions in the odd-numbered clauses of our predecessor’s collective bargaining agreement.” An employer may select one clause from Column A and two from Column B, treating the old collective bargaining agreement like a menu at a Chinese restaurant, to construct a bona fide unilateral announcement of terms. Formulaic words are unnecessary; an employer need not retype on its own letterhead the clauses it embraces.

But U.S. Can has a problem. To keep union officials happy, it deducted union dues from its employees’ checks and remitted the money to the union, as Continental had done, and enforced the union-security clause of the existing agreement. Checkoffs of dues and other payments from the employer to the union, like the enforcement of a union-security clause, depend on the existence of a real agreement with the union. 29 U.S.C. § 186(c)(4); Bethlehem Steel Co., 136 N.L.R.B. 1500, 1502 (1962), enforced in relevant part under the name Marine Workers v. NLRB, 320 F.2d 615, 619 (3d Cir.1963); Southwestern Steel & Supply, Inc. v. NLRB, 806 F.2d 1111, 1114 (D.C.Cir.1986). Cf. Litton, — U.S. at -, -, 111 S.Ct. at 2221-22. Otherwise the payment of money is a subvention barred by 29 U.S.C. § 186(a)(2), and the requirement to join the union (or pay dues to it) coerces employees in a way forbidden by 29 U.S.C. § 158(a)(3). Having done things that are lawful only if a collective bargaining agreement is in force, U.S. Can is in a pickle. For neither labor law nor the common law of contracts permits one to riffle through terms, building a “contract” out of the ones you like while discarding the rest. You accept the other party’s offer or you decline it; if you, strike out a single term, you are making a counteroffer, and unless the other party accepts that counteroffer there is no contract. No one doubts that if U.S. Can was making the union an offer — the terms of which were “the old agreement minus multi-plant bargaining and the IPJO” — the union curtly refused, and no contract came about. If there was no contract, however, then the checkoffs and union-security provisions were illegal.

The only other option is that U.S. Can, frustrated in its desire to negotiate new terms, assumed the old agreement as an unwelcome burden, but less of a burden than the strike that might have followed cessation of dues payments. Cf. Burns, 406 U.S. at 291, 92 S.Ct. at 1584 (“In many cases ... successor employers will find it advantageous not only to recognize and bargain with the Union but also to observe the pre-existing contract rather than to face uncertainty and turmoil.”). So the Board found, and substantial evidence supports its decision. Whenever the old agreement worked to its advantage, U.S. Can treated its provisions as binding on the union, not simply as management’s unilateral offer. For example, in responding to several grievances U.S. Can invoked the management-rights clause of Continental’s agreement, sometimes with language such as: “As specified, in the master agreement, ‘management responsibilities’ means ... ”, On other occasions, U.S. Can relied on provisions in the master agreement concerning seniority, contracting out, holidays, overtime pay, and discipline. Contracts work both ways; if some clauses of the master agreement can be enforced against the union, the rest can be enforced against the employer. The administrative law judge found, with considerable justification: “The management officials who answered these grievances evidently regarded the master agreement as the controlling instrument and effectively indicated as much both to the employees involved and to their Union representatives.” U.S. Can now dismisses these incidents as loose talk by managers who meant to refer to the master agreement only for information about the content of U.S. Can’s unilateral terms. Perhaps so, but we are not trying the case afresh. The Board did not exceed its authority in regarding these many invocations of the master agreement as evidence that U.S. Can treated that agreement as binding when convenient to do so. Because contracts bind both parties, the Board’s order is

Enforced.