Unite Here v. NLRB, No. 06-4440 (2d Cir. 2008)

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06-4440-ag Unite Here v. NLRB 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2007 (Argued: April 7, 2008 Decided: October 14, 2008) Docket No. 06-4440-ag -----------------------------------------------------x UNITE HERE, Petitioner, -- v. -NATIONAL LABOR RELATIONS BOARD, Respondent. -----------------------------------------------------x B e f o r e : WALKER, CABRANES, and RAGGI, Circuit Judges. Petitioner Union appeals from a decision of the National 30 Labor Relations Board that found that a one-time stock award 31 given in an equal amount to all employees of a company after an 32 initial public stock offering was a gift and therefore not 33 subject to mandatory bargaining. 34 denied. The petition for review is 35 36 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 IRA JAY KATZ, Associate General Counsel (David M. Prouty, General Counsel, on the brief), UNITE HERE, New York, NY, for Petitioner. RICHARD A. COHEN, Senior Attorney (Ronald Meisburg, General Counsel, John E. Higgins, Jr., Deputy General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, Robert J. Englehart, Supervisory Attorney, on the brief) National Labor Relations Board, Washington, DC, for Respondent. JOHN M. WALKER, JR., Circuit Judge: Petitioner, Unite Here ( the Union ), seeks review of a 22 National Labor Relations Board ( NLRB or Board ) order 23 dismissing a portion of the Union s complaint alleging unfair 24 labor practices against employer North American Pipe Corporation 25 ( NAP ). 26 a one-time stock award before distributing it to NAP s employees 27 pursuant to Sections 8(a)(1) and (5) of the National Labor 28 Relations Act ( NLRA ). 29 unlawful for an employer to interfere with, restrain, or coerce 30 employees in the exercise of the rights guaranteed [under the 31 NLRA], and Section 8(a)(5) makes it unlawful for an employer to The Union claimed that NAP was required to bargain over Section 8(a)(1) of the NLRA makes it 2 1 refuse to bargain collectively with the representatives of his 2 employees. 3 29 U.S.C. § 158(a)(1), (5). On appeal, the Union argues that the NLRB erred by applying 4 an incorrect legal standard when it determined that the stock 5 award qualified as a non-bargainable gift. 6 contends that the NLRB s ultimate factual determination was 7 erroneous. The Union also 8 BACKGROUND 9 10 Westlake Chemical Corporation ( Westlake ), of which NAP is 11 a subsidiary, operates thirteen manufacturing facilities in the 12 United States, with approximately 1500 employees. 13 represents fifty-six NAP employees at one of Westlake s 14 manufacturing facilities. 15 The Union Westlake was privately owned until August 11, 2004, when 16 Westlake conducted an initial public offering ( IPO ) of stock. 17 The IPO was successful, and, a few days after the IPO, Westlake 18 decided to make a one-time transfer of 100 shares of its stock to 19 every Westlake employee. 20 employees, Westlake announced: 21 22 23 In a memorandum to all Westlake In recognition of this important historic company event and the significant contribution made by each of you toward the growth and success of the company, the Board of Directors 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Westlake followed this announcement with a letter to each 15 employee explaining that Westlake had taken steps to account for 16 the tax obligations applicable to the award of stock and that 17 each employee could elect to have the requisite tax paid either 18 by withholding shares of common stock or by withholding cash from 19 the employee s base pay. 20 shares to all eligible hourly, supervisory, and management 21 employees at all of its facilities. 22 was approximately $1450 at the time of their issuance. 23 has authorized an award of 100 shares of common stock to each full-time, regular employee with at least six months of service as of today. These shares will be awarded to you initially in the form of stock units, and shares will be distributed to you at the conclusion of six months, provided you remained a regular, full-time employee during that period. Please accept our appreciation for your efforts. We are confident that as we work together we can continue to build a strong and successful Westlake Chemical Corporation for all of our shareholders, including each of you. Westlake awarded the same number of The value of the 100 shares Westlake never sought to bargain with the Union over the 24 stock award. After learning of the stock award, the Union filed 25 an unfair labor practice complaint alleging among other things 26 that NAP, through whom Westlake had distributed the shares, had 27 violated Sections 8(a)(1) and (5) of the NLRA, 29 U.S.C. § 28 158(a)(1),(5), by awarding shares of stock to the employees it 4 1 represented without affording the Union prior notice and an 2 opportunity to bargain. 3 found that no violation had occurred because the stock award was 4 a one-time-only gift tied to the success of the IPO and that the 5 award bore an insufficient connection to wages to bring it within 6 the scope of the NLRA under the doctrine of Benchmark Indus., 270 7 N.L.R.B. 22 (1984), aff d, Amalgamated Clothing v. NLRB, 760 F.2d 8 267 (5th Cir. 1985) (unpublished table decision). 9 The Board, with one member dissenting, The Union now appeals from the NLRB s decision. 10 DISCUSSION 11 12 Congress has delegated authority to the National Labor 13 Relations Board to decide whether a specific grievance is subject 14 to mandatory bargaining. 15 926 F.2d 181, 185 (2d Cir. 1991). 16 based upon the Board s expertise should receive, pursuant to 17 longstanding Supreme Court precedent, considerable deference, 18 Ewing v. NLRB, 861 F.2d 353, 357 (2d Cir. 1988) (citations 19 omitted), we afford the Board a degree of legal leeway, NLRB 20 v. Caval Tool Div., 262 F.3d 184, 188 (2d Cir. 2001) (citation 21 omitted). 22 conclusions to ensure that they have a reasonable basis in law. Olivetti Office U.S.A., Inc. v. NLRB, [M]indful that decisions This court [therefore] reviews the Board s legal 5 1 Caval Tool Div., 262 F.3d at 188. Its legal conclusions will be 2 disturbed only if found to be arbitrary or capricious. 3 Laborers Int l Union of N. Am. v. NLRB, 945 F.2d 55, 58 (2d Cir. 4 1991). 5 Factual findings of the Board will not be disturbed if they 6 are supported by substantial evidence in light of the record as a 7 whole. 8 substantial evidence, our inquiry is limited to determin[ing] 9 whether the supporting evidence, even if not preponderating in 10 this court s view, nevertheless provides a sufficient basis for 11 the Board s decision. 12 F.2d 495, 499 (2d Cir. 1967). 13 Caval Tool Div., 262 F.3d at 188. When reviewing for NLRB v. Interboro Contractors, Inc., 388 The issue before us is whether Westlake s award of its 14 shares amounted to a unilateral increase in wages or an 15 alteration of the terms and conditions of employment such that, 16 in the absence of bargaining, it violated NLRA §§ 8(a)(1) and 17 (5), 29 U.S.C. § 158(a)(1), (5). 18 747 (1962) ( Unilateral action by an employer without prior 19 discussion with the union does amount to a refusal to negotiate 20 about the affected conditions of employment under negotiation, 21 and must of necessity obstruct bargaining, contrary to the 22 congressional policy. ). See NLRB v. Katz, 369 U.S. 736, 6 1 2 I. The Board s Legal Conclusions The Union contends that the Board applied an incorrect legal 3 standard because gift doctrine case[ ]law requires that, to be 4 non-bargainable, an award must be of token value or given on 5 holidays such as Christmas. 6 legal determination, which we will not disturb unless it is 7 arbitrary and capricious. 8 and we perceive nothing erroneous, much less arbitrary and 9 capricious, in the Board s rejection of it. This argument challenges the Board s The Union s argument is without merit, 10 The question of whether an award constitutes wages and 11 therefore is the subject of mandatory bargaining turns upon 12 whether the award is so tied to the remuneration which employees 13 received for their work that [it was] in fact a part of it. 14 NLRB v. Niles-Bement-Pond Co., 199 F.2d 713, 714 (2d Cir. 1952). 15 In ascertaining whether a stock award is so tied to remuneration 16 that it must be the subject of bargaining, the Board looks to the 17 relationship of the award to other employment-related factors, 18 including work performance, wages, hours worked, seniority, and 19 production. 20 that is sufficiently tied to these work-related factors is 21 considered part of the overall compensation that an employee 22 receives and is therefore mandatorily bargainable. See Benchmark Indus., 270 N.L.R.B. at 22. 7 An award For example, 1 a bonus has been considered employment-related when it was tied 2 to the company s profits, Waxie Sanitary Supply, 337 N.L.R.B. 3 303, 304 (2001), or when it was paid based on supervisory 4 recommendations and work performance, Radio Television Technical 5 Sch., Inc. v. NLRB, 488 F.2d 457, 460 (3d Cir. 1973). 6 additional consideration in the analysis is the regularity with 7 which similar awards or payments have been made in the past. 8 Bonuses that are not tied to other employment-related factors 9 have been found to be the subject of mandatory bargaining when An 10 they were paid over a sufficient length of time to have become a 11 reasonable expectation of the employees and, therefore, part of 12 their anticipated remuneration. 13 539 F.2d 35, 37 (9th Cir. 1976) (citation and internal quotation 14 marks omitted); accord United Shoe Mach. Corp., 96 N.L.R.B. 1309, 15 1314-15 (1951). 16 NLRB v. Electro Vector, Inc., Contrary to the Union s argument, the determination of 17 whether an award or bonus is bargainable, does not depend on 18 whether it is of token value. 19 demonstrated its reluctance to hold that awards of nominal value 20 are subject to mandatory negotiation, see, e.g., Benchmark 21 Indus., 270 N.L.R.B. at 22 (describing dissent s contention that 22 a dinner and a five-pound ham constituted wages as overly Although the Board has 8 1 legalistic ), it has found bonuses of significant value not to be 2 the subject of mandatory bargaining where the bonus is 3 insufficiently tied to employment-related factors and not of 4 such a fixed nature . . . to have become a reasonable expectation 5 of the employees and, therefore, part of their anticipated 6 remuneration, Phelps Dodge Mining Co. v. NLRB, 22 F.3d 1493, 7 1496 (10th Cir. 1994) (citation and internal quotation marks 8 omitted) (holding that appreciation bonuses, one of which was 9 given to all employees in an amount equal to eighty hours of work 10 at each employee s standard pay rate, were not subject to 11 mandatory bargaining); see also NLRB v. Wonder State Mfg. Co., 12 344 F.2d 210, 213 (8th Cir. 1965) (finding award of one week s 13 pay to be a gift and not subject to mandatory bargaining). 14 Whether the award is given during the holiday season is 15 similarly of little consequence. There is nothing in the Board s 16 established test that limits the gift doctrine to holiday gifts. 17 To be sure, many awards given during the holidays have been found 18 to bear an insufficient relationship to employment-related 19 factors to constitute part of the employee s wages, but we have 20 found no case restricting the gift doctrine s applicability to a 21 particular holiday or season. 22 refusing to recognize such an arbitrary and unprincipled The Board acted reasonably in 9 1 requirement. 2 We thus find that the Board did not err, much less abuse 3 its discretion in rejecting the Union s contention that the gift 4 doctrine is limited to awards of token value or those given at 5 Christmas time. 6 7 8 II. The Board s Factual Findings The Union challenges the Board s factual findings on the 9 same grounds that were the bases for one Board member s dissent. 10 The dissent believed that the stock award was sufficiently tied 11 to compensation that it should have been mandatorily bargainable. 12 The ultimate question of whether the stock award is so tied to 13 remuneration that it is in fact a part of it is a question of 14 fact [and if] the Board s finding to that effect [is] supported 15 by substantial evidence it ends the matter. 16 Co., 199 F.2d at 714. 17 Niles-Bemont-Pond First, the dissent noted that Westlake made preparations to 18 withhold taxes from the stock award, which is consistent with a 19 view that the stock award constituted wages. 20 acknowledged that this factor might cut against treatment of the 21 stock award as non-bargainable, but concluded that this factor 22 was outweighed by other considerations. 10 The majority 1 Second, the dissent also argued that the stock award was 2 tied to the number of hours worked, in that only full-time 3 employees were eligible for the award. 4 however, that the respondent never made this argument before the 5 Board, and it noted both that the record was barren as to how 6 Westlake determined full-time employment and that the Union 7 proffered no evidence that any Union member was excluded because 8 of this condition. 9 The majority pointed out, Last, the dissent argued that the award was tied to 10 seniority because only employees who had worked for Westlake for 11 six months were eligible and that the award was a condition of 12 employment because it did not vest until the employee remained in 13 full-time employment for six additional months. 14 found the link between the prescribed time periods set forth in 15 the award announcement and the stock award to be far too tenuous 16 to support a conclusion that employees were receiving the stock 17 because of their performance. 18 No. 78, 2006-2007 NLRB Dec. ¶ 17174, at 4 (July 31, 2006). 19 majority concluded that the employees received the stock award 20 because the successful IPO permitted it and not as a reward for 21 working at NAP for six months prior to and six months after the 22 stock award. The majority N. Am. Pipe Corp., 347 N.L.R.B. 11 The 1 There is no basis to disturb the majority s factual 2 conclusions. The stock award here was a one-time event, given to 3 each employee, regardless of rank, in an equal amount. 4 record fully supports the majority s finding that the stock was 5 issued to mark the success of the IPO and not because NAP sought 6 to compensate those employees who had been at Westlake for six 7 months and to entice those employees to stay for at least six 8 more. 9 Board could have concluded that some of the employment-related The Though the dissent made colorable arguments as to why the 10 factors supported a finding that the stock award should be 11 treated as wages, the majority s conclusion is supported by 12 substantial evidence. 13 In sum, we find that the Board s legal determinations were 14 not arbitrary and capricious and that the Board s ultimate 15 determination is supported by substantial evidence. 16 17 18 CONCLUSION For the foregoing reasons, the petition is DENIED. 19 12

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