View PDF Version

No. 05-1279

In the Supreme Court of the United States

MIDWEST GENERATION, EME, LLC, PETITIONER

v.

LOCAL 15, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION

PAUL D. CLEMENT
Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217

RONALD MEISBURG
General Counsel
JOHN E. HIGGINS, JR.
Deputy General Counsel
JOHN H. FERGUSON
Associate General Counsel
LINDA DREEBEN
Assistant General Counsel
STEVEN B. GOLDSTEIN
Attorney
National Labor Relations
Board
Washington, D.C. 20570

QUESTIONS PRESENTED

1. Whether an employer who locks out full-term strikers to bring economic pressure to bear in support of its lawful bargaining demands violates Section 8(a)(1) and (3) of the National Labor Relations Act, 29 U.S.C. 158(a)(1) and (3), by declining to lock out employees who either did not strike, returned to work during the strike, or agreed to return to work during the strike.

2. Whether the court of appeals incorrectly drew a distinction between defensive and offensive lockouts.

3. Whether the court of appeals erred in directing the National Labor Relations Board to consider on re mand whether the collective bargaining agreement should be invalidated.

In the Supreme Court of the United States

No. 05-1279

MIDWEST GENERATION, EME, LLC, PETITIONER

v.

LOCAL 15, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI
FOR THE SEVENTH CIRCUIT

BRIEF FOR THE NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-21a) is reported at 429 F.3d 651. The decision and order of the National Labor Relations Board (Pet. App. 22a-46a) is reported at 343 N.L.R.B. No. 12.

JURISDICTION

The judgment of the court of appeals was entered on October 31, 2005. The petitions for rehearing were de nied on January 4, 2006 (Pet. App. 47a-48a). The peti tion for a writ of certiorari was filed on April 4, 2006. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Section 7 of the National Labor Relations Act (NLRA), 29 U.S.C. 157, gives employees the right to join labor organizations and to engage in other concerted activities for the purpose of collective bargaining, as well as the right to refrain from the activities. Section 8(a)(1) of the NLRA, 29 U.S.C. 158(a)(1), makes it an unfair labor practice for an employer "to interfere with, re strain, or coerce employees in the exercise" of their Sec tion 7 rights. Section 8(a)(3) of the NLRA, 29 U.S.C. 158(a)(3), makes it an unfair labor practice for an em ployer to discriminate "in regard to hire or tenure of employment or any term or condition of employment to * * * discourage membership in any labor organization."

In American Ship Building Co. v. NLRB, 380 U.S. 300, 301-302, 318 (1965), the Court held that an em ployer does not violate Section 8(a)(1) and (3) of the NLRA, when, after a bargaining impasse has been reached, it temporarily locks out its employees "for the sole purpose of bringing economic pressure to bear in support of his legitimate bargaining position." In a com panion case, NLRB v. Brown Food Store, 380 U.S. 278 (1965), the Court held that members of a multiemployer bargaining group lawfully responded to a whipsaw strike against one member of the group by locking out their regular employees and using temporary replacements to carry on their business. While the Court recognized that the practice of using nonunion replacements rather than union members was discriminatory, it upheld that practice because it had a "comparatively insubstantial" impact on the exercise of protected rights. Id. at 288.

Relying on both American Ship and Brown Food, the National Labor Relations Board (Board) held in Harter Equipment, Inc., 280 N.L.R.B. 597, 600 & n.10 (1986), aff'd sub nom. Local 825, International Union of Oper ating Engineers v. NLRB, 829 F.2d 458 (3d Cir. 1987), that, even absent economic action by the union, an em ployer acts for a legitimate business reason if it locks out union-represented employees and continues its busi ness with temporary replacements solely to persuade the union to agree to the employer's lawful contract de mands. As the D.C. Circuit has recognized, the ap proach in Harter Equipment is logically compelled by American Ship and Brown Food. See International Bhd. of Boilermakers, Local 88 v. NLRB, 858 F.2d 756, 759 (1988) (Boilermakers).

2. On June 28, 2001, International Brotherhood of Electrical Workers, Local 15, AFL-CIO (the Union), commenced an economic strike against petitioner after the parties' good faith negotiation did not produce a new collective-bargaining agreement. Pet. App. 2a. With the exception of eight bargaining unit employees who con tinued working (the nonstrikers), the entire bargaining unit of approximately 1150 employees went out on strike. Ibid. Petitioner maintained operations through the efforts of supervisory personnel, contractors, and temporary replacement employees. Id. at 3a. In addi tion to the eight nonstrikers, a total of 53 other employ ees (the crossovers) returned to work or offered to re turn to work before August 31, 2001. Id. at 2a.

On August 31, 2001, members of the Union voted to terminate the strike and offered to return to work. Pet. App. 3a. Petitioner declined the offer and advised the Union that it would not allow striking employees to re turn to work until the parties had agreed upon a new contract. Id. at 3a-4a. Petitioner also informed the Un ion that it would not lock out the 61 non-strikers and crossovers. Ibid. The parties ultimately agreed on a new contract, and on October 22, 2001, petitioner ended the lockout and returned the formerly locked-out em ployees to its active payroll. Id. at 4a.

3. In response to the Union's charge of an unfair labor practice, the Board's General Counsel issued an unfair labor practice complaint, alleging that petitioner's lockout of the strikers after they had made an uncondi tional offer to return to work violated the NLRA. Pet. App. 4a-5a. The parties jointly waived a hearing before an administrative law judge, and moved to transfer the proceeding to the Board on a stipulated record. Id. at 5a. The Board (by a 2-1 vote) determined that petitioner had not engaged in an unfair labor practice in violation of the NLRA and dismissed the unfair labor practice complaint. Id. at 22a-46a.

In evaluating the General Counsel's unfair labor practice charge, the Board applied the framework set forth in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26 (1967):

First, if it can reasonably be concluded that the em ployer's discriminatory conduct was "inherently de structive" of important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on employee rights is "comparatively slight," an antiunion moti vation must be proved to sustain the charge if the employer has come forward with evidence of legiti mate and substantial business justifications for the conduct.

Id. at 34 (quoting Brown Food, 380 U.S. at 289).

The Board observed that in American Ship this Court held "that a lockout for the 'sole purpose of bring ing economic pressure to bear in support of [the em ployer's] legitimate bargaining position' is not unlawful and is not inherently destructive of employee rights." Pet. App. 30a (quoting American Ship, 380 U.S. at 318). Based on its assessment of the relevant evidence, the Board found that petitioner's lockout was for the pur pose of bringing economic pressure to bear in support of its legitimate bargaining position. Ibid. The Board therefore concluded that the lockout was not "inherently destructive" of employee rights, but instead had a "com paratively slight" impact on such rights, requiring peti tioner to produce a "legitimate and substantial business justification for its conduct." Id. at 31a (citation omit ted).

The Board determined that petitioner had estab lished such a legitimate and substantial justification for its conduct. Pet. App. 31a-34a. In particular, the Board concluded that petitioner reasonably extended the lock out to strikers, but not to non-strikers and crossovers, in order to pressure employees to abandon the Union's bargaining demands. Id. at 32a. The Board emphasized that it made "no difference" whether the non-strikers and crossovers abandoned the strike "because they no longer shared the Union's goals or because they simply could not afford to go without a paycheck." Id. at 36a. What mattered, the Board concluded, was that "it was no longer necessary for [petitioner] to place additional pressure on [the non-strikers and crossovers] in order for [petitioner] to achieve its bargaining goals, for those employees had already eschewed the strike weapon dur ing the strike." Ibid. The Board buttressed its conclu sion with the observation that it was "self-evident that the [petitioner's] retention of the crossover[s] * * * and nonstrikers during the lockout augmented its effort to maintain continued production." Id. at 33a. While the Board recognized that employers are free to lock out all employees, including nonstrikers and crossovers, it held that employers are under no legal obligation to do so when they conclude that lesser pressure will suffice. Id. at 36a-37a.

4. On the Union's petition for review, the court of appeals reversed. Pet. App. 1a-21a. The court held that petitioner violated the NLRA by locking out full-term strikers, while not locking out non-strikers and cross overs. Id. at 5a, 21a.

The court began by observing that, under either the "inherently destructive" prong or the "comparatively slight" prong of Great Dane, the threshold issue is whether the employer can state a non-frivolous business justification for its action. Pet. App. 8a-9a. The court examined two potential justifications for petitioner's partial lockout: operational needs and pressuring hold- outs to abandon their bargaining position. Id. at 9a-10a. The court concluded that petitioner had "offered no proof that its operational needs justified the partial lock out." Id. at 10a.

The court also rejected as inadequate petitioner's claim that "it allowed the non-strikers and crossovers to return to work because they 'had removed themselves from the Union's economic action,' making it unneces sary to pressure them into abandoning the Union's bar gaining position." Pet. App. 14a (quoting id. at 29a). The court determined that petitioner's justification rested on an unsupported assumption that the non-strik ers and crossovers had abandoned the Union's bargain ing position. Id. at 15a-16a. The court found "no evi dence in the record indicating why individual employees chose not to participate in the strike," or "to distinguish the motivation of those who offered to return to work before August 31 and those who offered to return to work after August 31." Id. at 15a.

The court held that, even if it were shown that nonstrikers and crossovers had abandoned the Union's bargaining position, petitioner could not discriminate between those employees and the full-term strikers. Pet. App. 16a-20a. The court stated that "[a]n em ployer's discriminatory lockout on the basis of a pro tected activity is unlawful even when it is supportive of an employer's bargaining position." Id. at 16a. The court viewed that principle as applicable because it de termined that "[a]s of the time of the lockout, every em ployee had made an unconditional offer to return to work" and "[t]he only distinction between the two groups * * * was their participation in Union activities." Id. at 18a-19a. Having found that the partial lockout was unlawful, the court remanded the case to the Board to consider whether the partial lockout "coerced the Un ion and its members into ratifying [petitioner's] contract offer, thereby voiding the collective bargaining agree ment." Id. at 21a.

ARGUMENT

1. Petitioner seeks review (Pet. 10-14) of the court of appeals' holding that a lockout that is designed to put pressure on a union to accede to the employer's legiti mate bargaining demands violates the NLRA, when the lockout applies to strikers, but not to non-strikers and crossovers. A majority of the Board agrees with peti tioner that the court of appeals erred in holding that petitioner acted unlawfully. Review of the court's deci sion is not warranted, however, because the decision does not directly conflict with any decision of this Court, there is no conflict in the circuits, and the question has not arisen with sufficient frequency to warrant review in the absence of a conflict.

a. The court of appeals in this case held that peti tioner's lockout was unlawful because it discriminated between employees who were involved in the protected activity of striking and those who were not. Pet. App. 16a. The court apparently viewed such a distinction as per se impermissible under the NLRA, even when it reflects an employer's reasonable business judgment concerning the amount of pressure necessary to per suade a union to accede to its legitimate bargaining de mands. Id. at 16a-19a.

A majority of the Board agrees with petitioner that the court of appeals erred in reaching that conclusion. As the Board explained in its decision, under American Ship, a lockout that is designed to pressure a union into acceding to an employer's legitimate bargaining de mands is a legitimate economic weapon, and an em ployer's use of that legitimate tool is not transformed into a violation of the NLRA simply because the em ployer permits non-strikers and crossovers to continue to work. Pet. App. 30a, 35a-37a.

The Board also agrees with petitioner that the Court's decision in TWA v. Independent Federation of Flight Attendants, 489 U.S. 426 (1989), provides support for the Board's decision. In TWA, the Court held that an employer did not act unlawfully under the Railway Labor Act (RLA), 45 U.S.C. 151 et seq., when, at the end of a strike, it refused to displace crossovers who worked during the strike in order to reinstate striking employ ees with greater seniority. The Court reasoned that the RLA protects the right not to strike as well as the right to strike, TWA, 489 U.S. at 436, and that the Act there fore did not require an employer to "penalize[] those who decided not to strike in order to benefit those who did," id. at 438. The Court saw "no reason why those employees who chose not to gamble on the success of the strike should suffer the consequences when the gamble proves unsuccessful." Ibid.

Under the court of appeals' ruling, an employer that engages in a legitimate lockout of strikers may be re quired to extend the lockout to crossovers as well. The effect of such a policy, however, would be to penalize employees who exercised their right not to strike and to require employees who chose not to gamble on the suc cess of the strike to suffer the consequences of the strik ers' unsuccessful gamble. The Board's conclusion that the NLRA does not require that result (Pet. App. 33a- 34a) is fully consistent with TWA.

b. While the court of appeals erred in its ruling, re view is not warranted. Three considerations support that conclusion.

First, there is no direct conflict between the decision below and any decision of this Court. As discussed above, TWA provides support for the Board's decision. Contrary to petitioner's contention, however, TWA does not squarely conflict with the decision below. The hold ing of TWA is that an employer is not required to dis place crossovers who worked during the strike in order to reinstate striking employees with greater seniority. The decision below does not require an employer to dis place crossovers from their jobs and give their jobs to full-time strikers. Instead, it prohibits an employer from locking out strikers, but not crossovers, when members of both groups have made offers to return to work, and when, in the court's view, the sole proffered justification for permitting only crossovers to work is the assumption that they have abandoned the union's bargaining position. Thus, TWA does not directly con trol the question presented in this case.1

Second, the decision below does not conflict with any decision of another court of appeals. Indeed, this is the first court of appeals to address the question whether a lockout of full-term strikers in order to pressure a Union to accede to the employer's lawful bargaining demands is unlawful because the lockout does not apply to non- strikers and crossovers.

Third, the question presented has not arisen with sufficient frequency to warrant the Court's review in the absence of a clearly developed circuit conflict. In the 40 years since American Ship and Brown Food upheld em ployer lockouts as a legitimate economic weapon, the legality of an employer's retention of crossover employ ees during an otherwise lawful bargaining lockout has arisen only rarely. Review of petitioner's first question is therefore not warranted.

2. Petitioner next contends (Pet. 16-17) that the court of appeals relied on a distinction between defen sive lockouts and offensive lockouts, and that its decision therefore conflicts with the D.C. Circuit's statement in Boilermakers that a distinction between offensive and defensive lockouts is unworkable. See 858 F.2d at 768. That contention is based on a mischaracterization of the court of appeals' decision. Nowhere in its opinion did the court of appeals use the terms "offensive" or "defen sive." Nor did it say anything else to suggest that its decision turned on such a distinction. There is therefore no conflict between the decision below and the statement in Boilermakers that the lawfulness of a lockout does not depend on whether it is offensive or defensive.

In any event, the actual holding of Boilermakers is that an employer does not violate the NLRA by locking out the entire unit and continuing to operate with tem porary replacements to pressure its employees' union to accept the employer's bargaining demands. 858 F.2d at 764, 769. Boilermakers did not involve a partial lockout of only full-term strikers, and, accordingly, that decision does not address the partial lockout issue presented in this case.

Petitioner contends (Pet. 17) that the court of ap peals improperly limited the circumstances in which a lockout could be justified to "extreme business exigen cies." But the court referred to extreme business exi gencies only in connection with its discussion of when a partial lockout could be justified by "operational needs." Pet. App. 11a. The court did not state that justifications other than operational needs would be subject to an "extreme business exigencies" test.

Indeed, it is not even clear that the court of appeals adopted "extreme business exigencies" as the test for determining when a partial lockout is justified by opera tional needs. While the court stated that certain Board cases "illustrate the extreme business exigencies neces sary to justify a partial lockout based upon operational needs," Pet. App. 11a, the court also stated that "to jus tify a partial lockout on the basis of operational need, an employer must provide a reasonable basis for finding some employees necessary to continue operations and others unnecessary." Id. at 13a.

Whatever the court of appeals' view of the appropri ate standard for determining when a lockout is justified by operational needs, however, it does not provide a ba sis for granting review in this case. Petitioner has not argued that its partial lockout is justified by operational needs. And, as the court of appeals explained, petitioner did not introduce any evidence that would support an operational needs justification. Accordingly, this case does not present the question of what standard should apply when an employer seeks to justify a partial lock out based on operational needs.

3. Finally, petitioner contends (Pet. 23-24) that the court of appeals erred in directing the Board to consider whether petitioner's unlawful lockout coerced employees into ratifying the collective bargaining agreement, thereby invalidating the agreement. That contention does not warrant review.

Petitioner argues (Pet. 23-24) that, under H.K. Por ter Co. v. NLRB, 397 U.S. 99, 102 (1970), the Board lacks authority to invalidate a collective-bargaining agree ment. In H.K. Porter, however, the Court held only that the Board is "without power to compel a company or a union to agree to any substantive contractual provision of a collective-bargaining agreement." Ibid. H.K. Por ter did not address the question whether the Board has authority to invalidate a collective bargaining agreement that has been secured through coercion.

In any event, review of that question at this stage would be premature. On remand, the Board may decide not to invalidate the collective bargaining agreement. Moreover, if the Board voids the agreement, petitioner could seek review of that order before an appropriate court of appeals (see 29 U.S.C. 160(f)), and ultimately this Court. See generally Major League Baseball Play ers Ass'n v. Garvey, 532 U.S. 504, 508 n.1 (2001) (per curiam) (Supreme Court has the authority to consider questions determined in earlier stages of the litigation when certiorari is sought from the most recent judgment of the court of appeals); Reece v. Georgia, 350 U.S. 85, 87 (1955). Because petitioner's collective bargaining agree ment may never be invalidated, and because petitioner would have an opportunity to seek review at a later stage if it is invalidated, there is no reason to review that issue now.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

PAUL D. CLEMENT
Solicitor General

RONALD MEISBURG
General Counsel
JOHN E. HIGGINS, JR.
Deputy General Counsel
JOHN H. FERGUSON
Associate General Counsel
LINDA DREEBEN
Assistant General Counsel
STEVEN B. GOLDSTEIN
Attorney
National Labor Relations
Board

JUNE 2006

1 In TWA, moreover, the employer, as an "incentive for individual strikers to return to work," 489 U.S. at 437, promised crossovers that they would retain the desirable position they obtained during the strike, even after more senior employees returned to work. The Court held that the employer's promised inducement to crossovers was "fairly within the arsenal of economic weapons available to employers during a period of self-help." Id. at 438. The Board made no findings of analogous promises to crossovers in this case (such as a promise that they would retain their jobs in the event of a lockout), and accordingly the court of appeals did not express any view on the validity of an employer's decision to honor such promises in the event of a lockout.