Filed: Apr. 08, 2002
Latest Update: Feb. 21, 2020
Summary: Revised April 5, 2002 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 00-60794 _ MISSISSIPPI POWER COMPANY, Petitioner-Cross-Respondent, versus NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner. _ Petition for Review & Cross Petition for Enforcement of an Order of the National Labor Relations Board _ March 14, 2002 Before GARWOOD and WIENER, Circuit Judges, and VANCE*, District Judge. WIENER, Circuit Judge: In 1997, an Administrative Law Judge (“ALJ”) ruled that the P
Summary: Revised April 5, 2002 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 00-60794 _ MISSISSIPPI POWER COMPANY, Petitioner-Cross-Respondent, versus NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner. _ Petition for Review & Cross Petition for Enforcement of an Order of the National Labor Relations Board _ March 14, 2002 Before GARWOOD and WIENER, Circuit Judges, and VANCE*, District Judge. WIENER, Circuit Judge: In 1997, an Administrative Law Judge (“ALJ”) ruled that the Pe..
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Revised April 5, 2002
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 00-60794
__________________________
MISSISSIPPI POWER COMPANY,
Petitioner-Cross-Respondent,
versus
NATIONAL LABOR RELATIONS BOARD,
Respondent-Cross-Petitioner.
___________________________________________________
Petition for Review & Cross Petition for Enforcement
of an Order of the National Labor Relations Board
___________________________________________________
March 14, 2002
Before GARWOOD and WIENER, Circuit Judges, and VANCE*, District
Judge.
WIENER, Circuit Judge:
In 1997, an Administrative Law Judge (“ALJ”) ruled that the
Petitioner, Mississippi Power Company (the “Company”), had violated
Sections 8(a)(5) and (1) of the National Labor Relations Act (the
“Act”)1 when it refused to bargain collectively over currently
announced but prospectively effective changes in some of the
medical and life insurance benefits to be offered to some of the
Company’s future retirees. In 2000, the National Labor Relations
*
District Judge of the Eastern District of Louisiana,
sitting by designation.
1
29 U.S.C. §§ 151 et seq.
Board (the “Board”) affirmed the ALJ’s rulings, findings, and
conclusions, and adopted his recommended order, with
modifications.2 The Company has petitioned for review of the
Board’s order, and the Board has cross-petitioned for enforcement
of its order.
We affirm those aspects of the Board’s order grounded in the
determination that the Company’s announced prospective changes to
future retirees’ life insurance benefits constituted a violation of
the Act. We therefore deny the Company’s petition, and enforce the
Board’s order insofar as it pertains to life insurance.
We conclude, however, that the four locals of the
International Brotherhood of Electrical Workers that represent
approximately 600 of the Company’s 1,400 employees (collectively
“the Unions”) had expressly waived any right they might have had to
bargain over this matter, so the Company did not violate the Act
when it declined the Unions’ request to bargain over the announced
medical insurance changes. Therefore, insofar as the Board’s order
pertains to medical insurance, we grant the Company’s petition,
deny the Board’s cross-petition for enforcement, set aside the
order, and remand to the Board for entry of appropriate orders.
I. Facts and Proceedings
2
Mississippi Power Company, 332 NLRB No. 52 (2000), 2000 WL
1504672 (N.L.R.B.).
2
A. The Documents
Before describing the events that gave rise to the instant
petition for review, a summary of three documents that are central
to this controversy, and the interrelationship of those documents,
is in order.
1. The Memorandum of Agreement (“MOA”)
The MOA, which was signed by the Company and the Unions,
became effective on August 16, 1992 for an initial term of three
years. As the bargained-for agreement between those parties, the
MOA is a collective bargaining agreement, or, in the vernacular, a
CBA. The MOA covers a wide but non-exhaustive range of topics
pertinent to the terms and conditions of employment of those
employees who belong to the Unions (including, for example,
Seniority, Promotion, Layoff, and Discharge; Vacations, Leave of
Absence, and Sick Leave; and provisions addressing Grievances and
Arbitrations). The MOA does not address traditional employee
benefits, such as pension plans, life insurance, or medical
insurance, at all.
Following its initial three-year term, the MOA is
automatically renewed for one-year extension terms from one August
16 to the next, unless either party notifies the other in writing
of non-renewal, at least sixty days prior to the expiration of the
then-current term of the agreement. When, in 1995, the Company
announced prospective changes in life and medical insurance
benefits for some of its future retirees, the MOA was still in its
3
initial three-year term.
2. The Medical Benefits Plan
The Mississippi Power Company Medical Benefits Plan (the
“Medical Benefits Plan”) that was in effect in 1995 when the
subject changes were announced had become effective on March 1,
1993. It is a Company-drafted document that was executed
unilaterally by the Company but by no representatives of the
Unions. The Medical Benefits Plan’s articles cover numerous
topics, such as “Benefit Provisions,” “Eligibility for Benefits,”
and “Plan Administration.” Among these articles are two that are
pertinent to this controversy: Article IX (Reservations of Rights
by the Company and Limitations of Rights of Covered Persons), and
Article X (Amendment and Termination of the Plan).
Section 9.1 of Article IX provides:
9.1 Plan Voluntary on Part of Company. While
it is the intention of the Company that the
Plan shall be continued indefinitely and that
the Company contributions required hereunder
shall be made in each year that the Plan
remains in effect, the Plan is entirely
voluntary on the part of the Company.
[Emphasis ours.]
Article X provides, in relevant part:
10.1 Amendment of Plan. The Company...shall
have the right at any time by instrument of
writing, duly executed, to modify, alter or
amend, in whole or in part, the Plan.... The
Company makes no promise to continue these
benefits in the future and rights to future
benefits will never vest. In particular,
retirement or the fulfillment of the
prerequisites for retirement pursuant to the
4
terms of any employee benefit plan maintained
by the Company shall not confer upon any
Employee, Retired Employee or Dependent any
right to continued benefits under the Plan.
[Emphasis ours.]
10.2 Termination of Plan. The Company
intends that the Plan shall be permanent.
However, the Company...has the right to
terminate the Plan at any time.... After the
termination of the Plan..., the Company and
the Covered Employees shall have no further
obligations to make additional contributions
to the Plan.
Thus, the plain and unambiguous language of these sections of the
Medical Benefits Plan make clear that the Company has the right to
alter, at will and unilaterally, any terms of the Medical Benefits
Plan, including the unfettered right to terminate it altogether.
3. The Group Medical Insurance Agreement (“Insurance Side
Letter”)
The Insurance Side Letter is styled as a two-page offer and
acceptance that pre-dated the Medical Benefits Plan and that was
signed by the Company on August 15, 1992, the day before the MOA
became effective, but that did not become effective itself until it
was signed for acceptance by the Unions on December 18, 1992. It
is one of several attachments to the MOA. Like the MOA, the
Insurance Side Letter is the product of negotiations between the
Company and the Unions and is presented as the Company’s “offer
[that] shall become an agreement when the Union indicates its
acceptance hereof.” Following the portion describing the offer and
the Company’s signature, and above the Unions’ acceptance
5
signatures, is the boldface title, “Group Medical Insurance
Agreement.” The Insurance Side Letter does not expressly refer by
title to the Company’s medical benefits plan that was in place when
the Side Letter was executed; it could not refer to the Medical
Benefits Plan because it was not yet in existence. Thus the
Insurance Side Letter is a generic agreement applicable to any
group medical insurance that might be in place from time to time
during the term of the MOA. None contest, however, that the
Insurance Side Letter was applicable to the Medical Benefits Plan
at the time in April 1995 when the prospective changes to that plan
were announced.
In the Insurance Side Letter, the Company agrees to pay
“seventy percent of the cost of group medical insurance coverage”
for each participating employee and either one dependent or the
employee’s family, or $92.80 for a single employee’s coverage; and
the Company further agrees to pay seventy percent of any increase
in premium costs “in the event of any increase in premiums for the
above insurance.” As consideration for this commitment, the
Company extracts an offsetting commitment —— called a “condition”
—— from the Unions:
[1] the matter of insurance coverage or [2]
change in the Company’s contribution toward
the premium for insurance coverage of its
employees shall not be subject to bargaining
or a request for bargaining by the Union until
the expiration of the Memorandum of Agreement,
except by mutual consent. [Emphasis and
6
enumeration ours.]3
The mutual agreements in the Insurance Side Letter —— the
Company’s payment obligation and the Unions’ agreement that neither
coverage nor premium payments would be the subject of bargaining ——
are specified to run co-extensively with the MOA’s initial term and
all annual renewals, unless modified or terminated according to
procedures identical to those specified in the MOA, as outlined
above. And, just as does the MOA, the Insurance Side Letter
stipulates that “[u]ntil the parties have agreed upon such changes
the provisions of the agreement shall remain in full force and
effect.”
4. Interrelationship of the Documents
As noted, the bilateral MOA does not address traditional
employee benefits, such as pensions, life insurance, or health
insurance. On the opposite end of the contractual spectrum, the
3
The Unions’ agreement regarding bargaining about medical
insurance during the original term of the MOA and all extensions
extends to only two aspects of such insurance: (1) anything to
do with coverage, and (2) the Company’s financial commitment to
pay portions of the premiums on any such insurance. As the
Company bound itself to pay a specified percentage or dollar
amount of all medical insurance premiums as well as a percentage
of increases in premiums occurring during the initial term of the
MOA and all extensions, the negating of bargaining over any
“change in the Company’s contribution” must pretermit only the
Unions’ right to seek to bargain for greater premium
contributions by the Company during that term. In contrast, the
Insurance Side Letter’s negating of bargaining over “the matter
of insurance coverage” is unrestricted as to the type and extent
of coverage, or, indeed, to coverage vel non; the clause
pretermits the Unions’ seeking to bargain about anything to do
with coverage during the term of this agreement.
7
Company’s unilateral Medical Benefits Plan is an ERISA welfare
benefit plan which provides an employee benefit that, by the plan’s
own terms, can be changed from time to time or even terminated
altogether by the Company, acting alone. The third document, the
Insurance Side Letter, has features of both: Like the MOA, the
Insurance Side Letter is a bilateral agreement executed by both the
Company and the Unions; like the Medical Benefits Plan, however, it
relates only to the Company’s unilaterally granted employee benefit
of medical insurance, and then only to (1) premium payments and (2)
coverage. In essence, this third document links the first two by
specifying a quid pro quo between the parties on elements of the
two otherwise-unrelated documents. On the one hand, the Unions
obtain the Company’s commitment to maintain a specified level of
financial support not otherwise provided for in either the MOA or
any medical insurance plan, binding the Company throughout the term
of the MOA and all extensions to pay designated percentages or
dollar portions of the premiums for medical insurance coverage, as
well as designated percentages of any increases in premiums that
occur during that period. On the other hand, as consideration for
the Company’s assumption of such premium payment obligations, the
Unions expressly acknowledge that throughout the term of the MOA
and any annual renewals, the Unions cannot seek to bargain about
either increasing the Company’s premium payment commitments or any
changes in medical insurance coverage, whether Company-instituted
or Unions-requested, those being matters that the Company
8
explicitly reserved to itself under that plan. Stated differently,
the Company committed to a financial obligation it did not have
under the MOA regarding partial payments of medical insurance
premiums and emphasized a right that it presumably has always
enjoyed under its medical insurance plans to change or terminate
coverage4; in consideration for the Unions’ express acknowledgment
that they can neither seek to bargain for increased medical
insurance premium contributions by the Company nor challenge
through bargaining any unilateral changes in coverage of such
insurance that the Company might make. This third document thus
serves to bridge the gap between the other two documents —— one
bilateral and the other unilateral —— regarding medical insurance
coverage and the Company’s contributions to the payment of premiums
for such insurance. It is within the context of this
interrelationship of the three documents that we now consider the
Company’s petition and the Board’s cross-petition.
B. The Events
In April 1995, while the MOA and the Insurance Side Letter
were still in their initial three-year terms and the Medical
Benefits Plan was in effect, the Company called a meeting with the
4
It is likely, of course, that absent the Insurance Side
Letter, the Unions would have had a right to seek to bargain over
the Company’s unilateral changes, even though the Medical
Benefits Plan granted to the Company the right to make unilateral
changes. The Insurance Side Letter operates, therefore, to
remove any right to seek to bargain about unilateral changes to
medical benefits that the Unions might have held.
9
presidents of the four locals to announce changes in Company-
sponsored insurance coverage, both medical and life, provided to
retirees (also called Other Post-Retirement Benefits, or OPRBs).
The changes were not to become effective until January 1, 2002. In
addition, the changes would not affect any current or future
employees who, as of January 1, 2002, shall have either retired or
served the Company for 30 years or more (15 years or more if the
employee is age 55 or older on January 1, 2002). In other words,
the changes would affect only those current and future employees of
the Company who, on January 1, 2002, are still working for the
Company but shall have been working there for less than 30 years
or, if 55 years old or older on that date, shall have been working
there for less than 15 years. For each employee who would be
affected, the changes linked the Company’s premium contribution
level to the employee’s years of service and placed caps on the
Company’s contribution to subsequent retirees’ medical insurance
premiums. Retirees’ life insurance benefits were also changed, by
replacing the flat $12,500 coverage with a variable amount of life
insurance that also was linked to each covered employee’s years of
employment. In addition, the Company eliminated its policy of
subsidizing supplemental life insurance for retirees.
In June 1995, the Unions responded to the Company in writing,
requesting bargaining over the OPRB changes in medical benefits.
The letter stated, “[W]e feel [these changes] will be a hardship on
all current employees in the retirement plan[, and that] this is a
10
subject for bargaining, and the company has failed to bargain on
these issues.” The Company declined this request in a letter dated
July 18, 1995, saying, “[We] do not feel that the OPRB changes are
a mandatory subject of bargaining,” whereupon the Unions filed an
unfair labor practice charge with the Board, alleging unilateral
changes in retirement benefits. Following an investigation of the
matter, the Board issued a complaint against the Company, asserting
that its refusal to bargain over the OPRB changes constituted a
violation of sections 8(a)(5) and (1) of the Act.
An ALJ held a hearing on the complaint and concluded that the
Company had violated the Act as charged. Specifically, the ALJ
determined that the unilateral OPRB changes did involve a mandatory
subject of bargaining; that the prospective changes affected
current employees of the Company; and that the Unions had not
waived their right to bargain over the OPRBs either by acquiescing
in unilateral changes to OPRBs in the past or by accepting the
“condition” in the Insurance Side Letter, and thus were not
precluded from requesting bargaining by those provisions of the
Medical Benefits Plan that acknowledge the Company’s capacity to
institute unilateral amendment and termination of rights.
The Company filed exceptions to the ALJ’s opinion, after which
the Board affirmed the ALJ’s ruling, albeit for slightly different
reasons on some points.5 The Board agreed with the ALJ’s findings
5
Mississippi Power Company, 332 NLRB No. 52 (2000), 2000 WL
1504672 (N.L.R.B.).
11
that (1) a mandatory bargaining subject and current employees were
involved, and (2) the Unions’ earlier acquiescence in unilateral
changes did not constitute waivers. As for the Medical Benefit
Plan’s unilateral amendment and termination of benefits provisions,
the Board corrected the ALJ’s factual finding about the location of
the clause,6 but agreed with the ALJ that these provisions do not
reflect an explicit waiver of any right to bargain over the OPRBs.
Finally, the Board disagreed with the ALJ’s finding that the
“condition” expressly accepted by the Unions in signing the
Insurance Side Letter was, at most, “ambiguous”; but the Board went
on to hold that this condition addressed only changes in benefits
that would go into effect during the term of the Insurance Side
Letter. Thus, reasoned the Board, the condition was inapplicable
to the proposed January 2002 OPRB changes, and therefore was not a
waiver of the Unions’ right to bargain over those prospective
changes.
The Company filed a petition for review of the Board’s order,
pursuant to 29 U.S.C. § 160(f), after which the Board filed a
cross-application for enforcement of the order, pursuant to 29
U.S.C. § 160(e).
II. Analysis
A. Standard of Review
6
The ALJ stated that these provisions were in the OPRB
changes document, when in fact they are in the Medical Benefits
Plan.
12
The Act provides that the Board’s findings of fact shall be
conclusive, “if supported by substantial evidence on the record
considered as a whole.”7 As to construction of the parties’ duty
to bargain under section 8(d) of the Act, the United States Supreme
Court has said: “Construing and applying the duty to bargain and
the language of § 8(d), ‘other terms and conditions of employment,’
are tasks lying at the heart of the Board's function,”8 so that “if
[the Board’s] construction of the statute is reasonably defensible,
it should not be rejected merely because the courts might prefer
another view of the statute.”9 Last, we review the Board’s
construction of labor contracts de novo.10
B. Merits
1. The Duty to Bargain
Under the Act, it is an unfair labor practice for an employer
“to refuse to bargain collectively with the representatives of his
employees.”11 Employers and the employees’ representatives have a
7
29 U.S.C. § 160(e); see also NLRB v. Pinkston-Hollar
Construction Services, Inc., 954 F.2d 306, 309 (5th Cir. 1992).
8
Ford Motor Co. v. NLRB, 441 U.S. 488, 497 (1979).
9
Id. (emphasis added) (citing NLRB v. Iron Workers,
434
U.S. 335, 350 (1978) (“The Board's resolution of the conflicting
claims in this case represents a defensible construction of the
statute and is entitled to considerable deference.”)).
10
BP Amoco Corp. v. NLRB, 217 F.3d 869, 873 (D.C. Cir.
2000); NLRB v. United States Postal Service,
8 F.3d 832, 837
(D.C. Cir. 1993).
11
29 U.S.C. § 158(a)(5).
13
mutual obligation to bargain collectively over “wages, hours, and
other terms and conditions of employment.”12 Subjects that fall
within the statutory category of “wages, hours, and other terms and
conditions of employment” are commonly referred to as “mandatory
bargaining subjects.”13 The United States Supreme Court has noted
that, “[i]n general terms, the [category of mandatory bargaining
subjects] includes only issues that settle an aspect of the
relationship between the employer and employees.”14 This general
statement in turn highlights one last feature of a mandatory
bargaining subject: It must affect “employees.”
With respect to this requirement, the Supreme Court noted with
apparent approval the general definition of “employee” as “someone
who works for another for hire,” in holding that current retirees
were not employees under the Act, because “retired employees have
ceased to work for another for hire,” and it would “utterly destroy
the function of language to read [the Act’s terms] as embracing
those whose work has ceased with no expectation of return.”15
12
29 U.S.C. § 158(d).
13
See, e.g., Allied Chemical & Alkali Workers of America,
Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157,
176 (1971) (inquiring whether pensioners’ benefits were “a
mandatory subject of collective bargaining as ‘terms and
conditions of employment’ of the active employees who remain in
the unit”); NLRB v. Columbus Printing Pressmen & Assistants’
Union No. 252,
543 F.2d 1161, 1164 (5th Cir. 1976).
14
Allied Chemical, 404 U.S. at 178.
15
Id. at 167-69, 172.
14
Synthesizing all of these observations, then, a refusal to bargain,
or a unilateral change or modification, with respect to a mandatory
bargaining subject constitutes an unfair labor practice.
As the D.C. Circuit noted, however, “‘the duty to bargain
under the [Act] does not prevent parties from negotiating contract
terms that make it unnecessary to bargain over subsequent changes
in terms or conditions of employment.’”16 In addition, a party may,
by means of a “clear and unmistakable” waiver, relinquish its
statutory right to bargain.17
The Company advances two core reasons why it had no obligation
to bargain over its announced prospective changes to the OPRBs.
The first is that the OPRBs —— and changes to them —— were not
mandatory bargaining subjects. In support of this point, the
Company offers four affirmative defenses: (1) Future retirees are
not “employees” under the Act, (2) the announced changes in life
insurance benefits were not material, substantial, or significant;
(3) the announced changes did not vitally affect a mandatory
subject of bargaining for current employees; and (4) the announced
changes did not have a tangible effect on a mandatory subject of
bargaining.
The Company argues in the alternative that even if changes in
16
B.P. Amoco Corp. v. NLRB, 217 F.3d 869, 872-73 (D.C. Cir.
2000) (quoting NLRB v. United States Postal Service,
8 F.3d 832,
836 (D.C. Cir. 1993)).
17
See, e.g., Timken Roller Bearing Co. v. NLRB, 325 F.2d
746, 751 (6th Cir. 1963).
15
retirees’ medical insurance are properly classified as mandatory
bargaining subjects, the Unions expressly and unconditionally
waived or relinquished their right to bargain over them.
We agree with the Board that the Company’s announced
unilateral changes affected mandatory bargaining subjects. We
agree with the Company, however, that the Unions expressly and
unconditionally waived their right to demand bargaining over
changes in medical insurance benefits. Accordingly, we conclude
that when the Company announced unilateral changes to future
retirees’ life insurance benefits —— concerning which the Unions
had not waived their right to bargain —— the Company violated the
Act and the Board’s order must be enforced. As to the medical
benefits, however, we conclude that the Company had the right to
change those benefits unilaterally and that the Unions’ express
waiver of their right to demand bargaining shields the Company from
liability: In announcing unilateral changes to medical benefits,
the Company did not violate the Act, and we therefore set aside the
Board’s order insofar as it relates to medical benefits.
2. Changes Affecting Mandatory Bargaining Subjects
In defending its acts, the Company advances four reasons why
its announced unilateral changes did not violate the Act: (1)
Future retirees are not “employees” under the Act, (2) the
announced changes in life insurance benefits were not material,
substantial, or significant; (3) the announced changes did not
vitally affect a mandatory subject of bargaining for current
16
employees; and (4) the announced changes did not have a tangible
effect on a mandatory subject of bargaining. The Company’s first
defense seeks to limit the meaning of “employee” under the Act18;
the remaining three seek to show that the changes did not reach or
affect a mandatory bargaining subject, or, in the words of the Act,
“wages, hours, and other terms and conditions of employment.”19
As noted above, the Supreme Court has instructed us to accord
special deference to the Board’s interpretation of the Act:
“Construing and applying the duty to bargain and the language of §
8(d), ‘other terms and conditions of employment,’ are tasks lying
at the heart of the Board’s function,” so that “if [the Board’s]
construction of the statute is reasonably defensible, it should not
be rejected merely because the courts might prefer another view of
the statute.”20 Heeding this admonition, we turn now to the
Company’s four arguments.
The Company first asserts that the Board erred when it
categorized the “future retirees” affected by the OPRB changes as
“employees” under the Act, leading in turn to the erroneous
conclusion that the OPRBs were mandatory bargaining subjects. The
18
29 U.S.C. § 152(3).
19
29 U.S.C. § 158(d).
20
Ford Motor Co. v. NLRB, 441 U.S. 488, 497 (1979) (citing
NLRB v. Iron Workers,
434 U.S. 335, 350 (1978) (“The Board’s
resolution of the conflicting claims in this case represents a
defensible construction of the statute and is entitled to
considerable deference.”)).
17
Company appears to argue, in essence, that the Board has
misinterpreted the seminal case on this issue, Allied Chemical &
Alkali Workers of America v. Pittsburgh Plate Glass Co.21 It is
well settled, however, that Pittsburgh Plate Glass stands for the
proposition that the retirement benefits of a company’s current
retirees are not mandatory bargaining subjects but that “future
retirement benefits of active workers are part and parcel of their
overall compensation and hence a well-established statutory subject
of bargaining.”22 Even if there were merit to the Company’s
argument that Pittsburgh Plate Glass has been misconstrued and in
fact establishes a distinction between non-vested retirement
benefits and contractually enforceable ones, we would still
conclude that the Board’s interpretation of Pittsburgh Plate Glass,
and the resulting construction of the statutory term “employee,” is
“reasonably defensible,”23 at least as applied to materially adverse
21
404 U.S. 157 (1971).
22
Pittsburgh Plate Glass, 404 U.S. at 180 (emphasis added).
23
Neither is the instant case the only one in which the
Board has determined that changes affecting future retirees
constitute mandatory subjects of bargaining under the Act. See,
e.g., Georgia Power Co., 325 N.L.R.B. 420, 420 (1998) (“[T]he
prospectively announced changes in retirement benefits will
affect currently active unit employees who will retire on or
after the announced implementation date, and therefore were
mandatory bargaining subjects.”); Midwest Power Systems, Inc.,
323 N.L.R.B. 404, 406 (1997) (“The Supreme Court has clearly stated
that the future retirement benefits of current active employees
are a mandatory subject of collective bargaining under the Act.
Unilateral modification of such benefits constitutes an unfair
labor practice.”); Titmus Optical Co., Inc.,
205 N.L.R.B. 974, 981
(1973) (“Changes in retirement benefits that affect current
18
changes in a subsisting retirement benefit. Thus, this initial
challenge to the Board’s ruling fails.
For its second defense, the Company contends that the life
insurance OPRB changes were not “material, substantial, and
significant,” asserting in its appellate brief:
Not one single member of the bargaining unit covered by
the present Agreement is presently affected by this
announcement. Since there is neither a present injury to
the individuals in the bargaining unit, nor an
infringement on the Unions’ right to bargain over this
announcement of a future change when it becomes a present
change, the Company’s announcement did not give rise to
a legally cognizable injury under § 8(a)(5).
Whether we construe the Company’s objection as centering on the
prospective nature of the changes, or on the degree of the change,
it fails. As we have already observed, retirement benefits,
although prospective, are considered part of an employee’s
compensation package, and changes in the computation of such
benefits do constitute significant changes.24 Moreover, as the
Board points out, the changes that have been held not to be
“material, substantial, and significant,” and therefore not
meriting protection under the Act, did not alter employees’
employees are a mandatory subject of collective bargaining, and a
unilateral modification of such benefits, during the term of an
agreement is in derogation of the bargaining obligation and
constitutes an unfair labor practice.”).
24
See Georgia Power Co., 325 N.L.R.B. 420, 420 n.5 (1998)
(“[I]f a change involves the terms and condition of employment of
unit employees, it is a mandatory bargaining subject even if only
a relatively few employees are affected.”).
19
entitlements or expectations at all.25 Last, we remain mindful of
our deference to the Board’s construction of the Act, and echo the
United States Supreme Court’s response to a similar argument:
As for the argument that in-plant food prices and
services are too trivial to qualify as mandatory
subjects, the Board has a contrary view, and we have no
basis for rejecting it. It is also clear that the
bargaining–unit employees in this case considered the
matter far from trivial.... In any event, we accept the
Board’s view that in-plant food prices and service are
conditions of employment and are subject to the duty to
bargain.26
We therefore reject this second challenge to the Board’s
determination.
For its third defense, the Company argues that the announced
prospective changes did not “vitally affect” a mandatory bargaining
subject. This argument fails because the words, “vitally affect,”
hearken to a test that is inapplicable in this context. In
Pittsburgh Plate Glass, the Supreme Court noted that, “[a]lthough
normally matters involving individuals outside the employment
relationship do not fall within [the mandatory bargaining subject]
25
See, e.g., Civil Service Employees Ass’n, Inc., 311 N.L.R.B.
6, 7-8 (1993) (employees who were already required to remain in
constant touch with the office were now required to carry
beepers); Litton Microwave Cooking Products,
300 N.L.R.B. 324, 331-32
(1990), enforced,
949 F.2d 249 (8th Cir. 1991), cert. denied,
503
U.S. 985 (1992) (employer installed buzzers to signal the
beginning and end of breaks, but did not alter the time allotted
for breaks).
26
Ford Motor Co. v. NLRB, 441 U.S. 488, 501 (1979).
20
category, they are not wholly excluded.”27 The Court went on to
describe cases in which the subject matter of negotiations between
a company and a non-employee third party had an impact on the terms
and conditions of the company’s employees.28 The Court concluded
that, when determining whether a company’s negotiations with a
third party were a mandatory bargaining subject, “the question is
not whether the third-party concern is antagonistic to or
compatible with the interests of the bargaining-unit employee, but
whether it vitally affects the ‘terms and conditions’ of their
employment.”29
In Keystone Steel & Wire v. NLRB,30 the D.C. Circuit reviewed
the Board’s attempt to apply the “vitally affects” test, and
observed that “[t]he ‘vitally affects’ test is relevant...only when
a union seeks to bargain over a matter that would not normally be
27
Pittsburgh Plate Glass, 404 U.S. 157, 178 (1971)
(emphasis added).
28
Id. at 178-79 (1971) (emphasis added) (citing Local 24,
Inter. Teamsters, etc., Union v. Oliver,
358 U.S. 283 (1959)
(minimum rental that carriers would pay to truck owners who drove
their own vehicles in carrier’s service, in place of carrier’s
employees, was integral to the establishment of a stable wage
structure for employee-drivers) and Fibreboard Paper Products
Corp. v. NLRB,
379 U.S. 203 (1964) (company’s contracting labor
out to independent contractors is a statutory subject of
collective bargaining).
29
Pittsburgh Plate Glass, 404 U.S. at 179 (emphasis added).
30
41 F.3d 746 (D.C. Cir. 1994).
21
viewed as within the scope of mandatory bargaining.”31 That is to
say, when a company’s negotiations with its own employees are at
issue, the vitally affects test is inapplicable32; it only comes
into play when some decision-making is at issue that does not at
first glance appear to be within the scope of the mandatory
bargaining provisions. The only bargaining issue presented here is
one directly between the Company and current employees, who are
potential future retirees; the Company’s assertion that the
announced changes do not “vitally affect” current employees is
simply wrong.
In its fourth and final defense, the Company contends that
employers need only bargain over those changes that have a
“tangible effect” on the employees’ concerns. The Board’s answer
to this argument is concise and on target: Keystone Steel & Wire,
from which the Company extracts the notion of a “tangible effect,”
is easily distinguishable from the instant case on two counts.
First, the unilateral changes at issue in Keystone Steel & Wire
were to managements’ retirement benefits only,33 unlike the instant
case in which the OPRB changes were to the employees’ plans.
31
Id. at 753 (quoting U.S. Dept. of Navy v. FLRA,
952 F.2d
1434, 1440 (D.C. Cir. 1992)) (emphasis in original).
32
See Georgia Power Co., 325 N.L.R.B. 420, 420 n.5 (1998) (“The
Board rejected that same argument in Midwest Power Systems,
finding the ‘vitally affects’ doctrine inapplicable to the
situation of current employees with a direct interest in their
future retirement benefits.”).
33
See Keystone Steel & Wire, 41 F.3d at 747-48.
22
Second, the Keystone Steel & Wire court considered the scope of the
“effect” on employees’ concerns in the course of its “vitally
affects” analysis, which, again, is inapplicable to these facts.
To summarize, all four of the Company’s defensive attempts to
cast the OPRB changes as non-mandatory bargaining subjects fail.
As we explain below, the Insurance Side Letter constituted a waiver
by the Unions of their right to demand bargaining over medical
insurance changes. With respect to life insurance, however, the
Company can point to no document showing the Unions’ waiver of
their right to demand bargaining. Absent that, the Company is left
without a viable defense to the Board’s ruling that it has violated
the Act. We must therefore defer to the Board’s conclusion that
the Company’s announced unilateral changes to future retirees’ life
insurance benefits constituted a violation of the Act and,
accordingly, enforce the Board’s order insofar as it pertains to
life insurance.
3. The Unions’ Waiver
Our conclusion that the Company’s announced unilateral changes
to future retirees’ insurance benefits affected a mandatory
bargaining subject holds equally true for the changes to life and
medical insurance benefits. It is in the context of the changes to
medical insurance benefits, however, that the Company’s alternative
argument becomes relevant: Even if changes in retirees’ medical
insurance are properly classified as mandatory bargaining subjects,
23
the Unions expressly and unconditionally waived or relinquished
their right to bargain over them. We agree with the Company that
the Unions did waive and relinquish their right to demand
bargaining over changes in medical insurance.34
To reiterate, the MOA does not mention insurance benefits of
any kind, but the Insurance Side Letter contains the following
language which imposes a “condition” on —— more accurately, creates
quid pro quo “consideration” for —— the Company’s agreement to
contribute a set percentage or dollar amount to insurance premiums,
including future increases:
an agreement [by the Unions], as evidenced by
the Union’s [sic] acceptance, that [1] the
matter of insurance coverage or [2] change in
the Company’s contribution toward the premium
for insurance coverage of its employees shall
not be subject to bargaining or a request for
bargaining by the Union until the expiration
of the Memorandum of Agreement, except by
mutual consent. [Enumeration ours.]
When the ALJ reviewed this clause, he stated,
As to the zipper clause,35 the language in that
34
In addition to the arguments discussed above, the Company
also advanced another, grounded in its rights under ERISA to
alter the Medical Benefits Plan at will. Because we conclude
that the Unions waived their right to demand bargaining when they
signed the Insurance Side Letter, we need not consider the
Company’s ERISA-based argument.
35
Although the ALJ termed this provision of the Insurance
Side Letter a “zipper clause,” and the parties have continued to
refer to it as such in their briefs and arguments, we note that
this clause, which specifically prevents bargaining over
particular topics, is quite unlike the typical zipper clause
examined in the case law. Typically, after a CBA has been
negotiated and agreed on by the parties, a zipper clause is
24
clause appears to preclude Respondent from
unilaterally changing the OPRB. At most the
language is ambiguous. The Board has
consistently refused to find waiver by unions
inserted to “zip up” the agreement. As one ALJ explained, zipper
clauses
are often inserted in labor contracts to make sure that
there is nothing dangling and that, during the contract
term, one party cannot force the other back to the
bargaining table to discuss items that they forgot to
discuss or which they deliberately avoided during
negotiations but which fall within the broad definition
of “wages, hours, and terms and conditions of
employment.”
Mary Thompson Hospital, 296 N.L.R.B. 1245, 1249 (1989). The
stereotypical zipper clause provides:
The parties acknowledge that during the
negotiations which resulted in this Agreement, each had
the unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not
removed by law from the area of collective bargaining,
and that the understanding and agreements arrived at by
the parties after the exercise of that right and
opportunity are set forth in this agreement.
Therefore, the Company and the Union, for the life of
this Agreement, each voluntarily and unqualifiedly
waives the right, and each agrees that the other shall
not be obligated to bargain collectively with respect
to any subject or matter referred to, or covered in
this Agreement, or with respect to any subject or
matter not specifically referred to or covered by this
Agreement even though such subject or matter may not
have been within the knowledge or contemplation of
either or both of the parties at the time they
negotiated or signed this Agreement.
GTE Automatic Electic Incorporated, 261 N.L.R.B. 1491, 1491 (1982).
When such a zipper clause is at issue, it is easy to see why one
might question whether the unions had granted a clear and
unmistakable waiver of the right to bargain over a specific
matter not covered in the CBA. Here, in stark contrast, we are
not left to wonder whether the union representatives might have
failed to think about medical insurance when they penned their
signatures. Much of the case law analyzing the unions’ waiver by
means of a typical zipper clause is therefore inapposite, for
this is no typical zipper clause, despite the parties’ calling it
one.
25
in situations similar to the instant one.36
The Board, in its review of the ALJ’s ruling, disagreed with his
approach, and explained its preferred analysis:
Finding, in effect, that the zipper
clause applied to the OPRB changes at issue
here, the [ALJ] found that “the language in
the zipper clause appears to preclude
Respondent from unilaterally changing OPRB.
At most it is ambiguous.” Accordingly, the
judge found that the zipper clause did not
establish that, as the Respondent contended,
the Locals had waived their right to bargain
over the OPRB changes.
Contrary to the judge, we find that the
zipper clause does not apply to the OPRB
changes at issue here and, on this basis, find
that the zipper clause does not evidence the
Locals’ waiver of their right to bargain over
the OPRB changes. The zipper clause, by its
terms, contains an offer by the Respondent and
an acceptance by the Locals that covers the
employees’ medical premiums “during the term
of the resulting [Insurance Side Letter]
agreement.” The announced OPRB changes,
however, are for changes that will not occur
until January 1, 2002, a date outside the term
of the side-letter agreement. Therefore, the
announced OPRB changes are not in any way
addressed by the zipper clause. Since the
announced OPRB changes will fall outside the
term of the side-letter agreement, the zipper
clause contained in the side-letter agreement
cannot constitute a clear waiver of the
Locals’ right to bargain over those changes.
Therefore, the zipper clause does not permit
the Respondent to make the OPRB changes at
issue here without bargaining with the
Locals.37
36
Mississippi Power, 332 NLRB No. 52 (2000), 2000 WL
1504672, at *11 (citing Exxon Research & Engineering Co.,
317
N.L.R.B. 675 (1995); T.T.P. Corp.,
190 N.L.R.B. 240, 244 (1971)).
37
Id. at *4.
26
Thus the Board construed the Insurance Side Letter in such a way
that its “term” —— which is coextensive with the term of the MOA,
comprises both the initial three-year term and all annual renewals,
which clearly could have (and, for all we know, might have)
prolonged the term of the MOA, and thus the Insurance Side Letter,
beyond January 1, 2002 —— defines not only the time during which
bargaining is foreclosed on the enumerated topics, but also the
time during which the Company’s unilateral changes must take effect
if the Unions’ relinquishment of bargaining rights is to apply.
Nothing in the language of the Insurance Side Letter supports
the Board’s construction. As a temporal element, the term of the
Insurance Side Letter addresses two things, and two things only:
It states first that “during the term of the resulting agreement
[the Company] will continue to pay seventy percent of the cost of
group medical insurance coverage...,” and second, that, as we have
emphasized, the “matter[s] of insurance coverage or change in the
Company’s contribution toward the premium” will not be subject to
bargaining or a request for bargaining by the Unions “until the
expiration of the [MOA].” (Emphasis added.) Plainly, the
Company’s contribution commitment, on the one hand, and the Unions’
relinquishment of any right to insist on bargaining for (1)
increases in the Company’s contributions and (2) unilateral
coverage changes by the Company, on the other hand, are the only
matters that are cabined within the term of the Insurance Side
Letter. The Board impermissibly stretches the language of the
27
Insurance Side Letter to construe the express term of the agreement
as containing not only a temporal moratorium on bargaining, but
also a temporal limit on the effective date of the changes over
which bargaining is foreclosed. Yet the date on which any Company-
declared change is to take effect is simply irrelevant. The Board
misconstrued the contract when, from the whole cloth, it created a
an effective-date temporal element in the Insurance Side Letter.
If allowed to stand, such an interpretation would produce the
anomalous result of telling the Company, “If you want to make a
change in coverage that negatively affects employees who are union
members, you must make such changes effective now (i.e., start the
pain immediately) rather than postponing it for seven years.”
Differing with the Board’s contractual interpretation, we hold
that the Unions expressly, clearly and unmistakably waived
bargaining on the changes in the Medical Benefits Plan that are
here at issue. In essence, the Unions agreed that the Company
could modify coverage or terminate that plan altogether, but
neither expressly nor implicitly limited that concession to
modifications or terminations with current effective dates.
Rather, the Company was free to make such changes effective as of
any time during the continued existence of this particular CBA
which, through a series of automatic renewals, could extend past
January 1, 2002.38
38
Again, the question is not before us, but the converse of
this proposition is that if the CBA should terminate before the
28
We are aware, as the Board reminds us, that as a general rule,
appellate courts are constrained to give considerable deference to
the Board’s determinations on the issue of waiver. Our disapproval
of the Board’s waiver determination here is premised, however, on
basic principles of labor contract construction, over which we
conduct de novo review39 and with respect to which we need accord
no deference to the Board’s determination.40 In reaching a
conclusion different from the Board’s with respect to waiver, we
get there by correcting the Board’s misconstruction of the plain
language of these labor contracts, which is our special
prerogative, not the Board’s.
prospective effective date of the changes, then perforce, they
would be of no effect unless incorporated in the successor CBA or
group medical insurance plan, or both.
39
BP Amoco Corp. v NLRB, 217 F.3d 869, 873 (D.C. Cir. 2000)
(“Because the courts are charged with developing a uniform
federal law of labor contracts under section 301 of the Labor
Management Relations Act...., we accord no deference to the
Board’s interpretation of labor contracts.”) (quoting NLRB v.
United States Postal Service,
8 F.3d 832, 836 (D.C. Cir. 1993));
United States Postal
Service, 8 F.3d at 837 (“In a case such as
this one,...the resolution of the refusal to bargain charge rests
on an interpretation of the contract at issue.... Normally,
under federal labor laws, arbitrators and the courts, rather than
the Board, are the primary sources of contract interpretation.”).
We acknowledge, of course, that our review is for clear error
only when a contract is ambiguous, because such review implicates
questions of fact. Determination of whether a contract is
ambiguous is a question of law, however, which we review de novo.
Likewise, interpretations of unambiguous contracts, such as the
one presently before us, also present questions of law, subject
to de novo review. See Stinnett v. Colorado Interstate Gas Co.,
227 F.3d 247, 254 (5th Cir. 2000).
40
BP Amoco, 217 F.3d at 873.
29
Neither does our construction require an impermissibly
“expansive” reading of the contracts, which is how the Board
classified the Company’s like reading. None disputes that the
parties reached the Insurance Side Letter agreement following
negotiations, so that any argument suggesting that the Unions’
waiver of a statutory bargaining right was unwitting is foreclosed
by the facts. Neither do we need to infer any terms to reach our
conclusion; rather, we simply correct the Board’s own erroneous
inference of provisions (the limit mistakenly imposed on the
effective date of changes about which bargaining was foreclosed)
and rely on the clear and unambiguous language of the contract,
which uses the co-extensive time spans of the MOA and the Insurance
Side Letter to define only the term of (1) the Company’s agreement
to maintain the level of premium contribution while health
insurance coverage continues, and (2) the Unions’ surrender of any
bargaining right over premiums and coverage. We discern nothing in
the agreements, either explicit or implicit, about when otherwise
permissible Company changes can or cannot take effect.
The thrust of our conclusion that the “condition” in the
Insurance Side Letter constituted a waiver should be obvious: The
right to bargain over the “matter of insurance” was the right
explicitly relinquished by the Unions when they signed the
Insurance Side Letter in exchange for a guaranteed level of premium
contributions from the Company for as long as the MOA and Company-
sponsored group medical insurance continued in existence. When
30
viewed in the light of the pellucid language of the Insurance Side
Letter, therefore, the Unions’ “request for bargaining” over the
changes in retirees’ medical insurance benefits —— indisputably a
“matter of insurance” —— before “the expiration of the [MOA],”
flies in the face of the parties’ express agreement. As a result,
the Company was justified in refusing to heed the Unions’ request
to bargain over those prospective OPRB changes affecting health
insurance, declared by the Company during the term of the Insurance
Side Letter and the MOA.
Of course, the Insurance Side Letter did give the Unions an
alternative course of action which they did not take. Like the
MOA, the Insurance Side Letter, states that “[t]he party desiring
to change or terminate the agreement after the expiration of the
[MOA], must notify the other party in writing at least sixty (60)
days prior to August 16 of the year in which such termination or
changes are desired, stating in the notice the nature of the
changes desired.” The Company announced the prospective OPRB
changes on April 21, 1995, and the then-current term of the MOA was
scheduled to expire on August 16, 1995. Nothing prevented the
Unions from notifying the Company, in writing, by or before June
15, 1995 —— or, for that matter, June 15 of any subsequent plan
year before the one commencing August 16, 2001 —— of their desire
not to have the MOA and the Insurance Side Letter agreement renew
automatically. But the Unions cannot have it both ways: They
cannot allow the MOA —— and thus the Insurance Side Letter
31
Agreement —— to continue being extended from each August 16 to the
next and, at the same time, seek to bargain about that which they
have waived the right to bargain over for the duration of those
agreements.
4. The Company’s Unilateral Change of Retirees’ Medical
Benefits
The Board advances that even if, through the Insurance Side
Letter, the Unions did waive their right to bargain, that waiver
did not give the Company carte blanche to make unilateral changes
to future retirees’ medical benefits. In its brief, the Board
argues:
Accordingly, even if the Company were correct
in asserting that the zipper clause precluded
a union request to bargain over medical
insurance matters, the zipper clause also
would, as a threshold matter, have precluded
the Company from unilaterally altering the
terms of medical insurance in the first place.
Not only does this non-sequitur voice flawed logic, it is directly
contradicted by the clear wording of that agreement.
We acknowledge that a waiver of bargaining must be clear and
unmistakable before it can be used to defend against an unfair
labor practice charge of refusing to bargain; and, too, we are
aware that there must be ample evidence showing that the waiver
actually covers the matter at issue. Here, there is express
waiver, clearly and unmistakably articulating that the identified
topics —— coverage and premiums on medical insurance —— “shall not
32
be subject to bargaining or a request for bargaining by the Union.”
Moreover, the agreement in which the waiver is found is titled
“Group Medical Insurance Agreement,” and the waiver expressly
precludes bargaining on the “matter of insurance.” This supports
incontrovertibly the factual determination that the specific topic
at issue (the Company’s future contributions to medical insurance
benefits of future retirees and the extent and existence of their
coverage) is within the topic covered by the instant waiver.
That there has been a waiver, and that the waiver covers the
contested matter, must therefore be accepted. It is the effect of
the waiver that the Board would put at issue in its alternative
argument. The Board appears to perceive that the only effect a
waiver can have is to remove the Unions’ right affirmatively to
propose changes to medical insurance. That is only one side of the
coin, however; the other, inseparable side of that same coin is the
employer’s right to make unilateral changes without being obligated
to bargain with the Unions first. In its review of the ALJ’s
ruling in the instant case, the Board betrayed its own
understanding that these would be concomitant results of a finding
of waiver:
Since the announced OPRB changes will fall outside
the term of the side-letter agreement, the zipper
clause contained in the side-letter agreement
cannot constitute a clear waiver of the Locals’
right to bargain over those changes. Therefore,
the zipper clause does not permit the Respondent to
make the OPRB changes at issue here without
33
bargaining with the Locals.41
The unspoken assumption, of course, is that if the Board had found
waiver, it, too, would have concluded that the Company was free “to
make the OPRB changes at issue here without bargaining with the
Locals.” Similarly, Pepsi-Cola Distributing Co., a case on which
the Board relies, repeatedly bespeaks the understanding that a
party, through waiver, relinquishes “the right to be consulted
concerning unilateral changes.”42 Thus, we understand that once a
clear and unmistakable waiver concerning the matter at issue is
found, the effect of that waiver is not only to foreclose the
Unions’ right to request changes and demand bargaining, but also to
eschew any obligation of the employer to bargain before making
unilateral changes of the kind reserved.
This conclusion is further supported by the facts of the
instant case, in which the unilateral change at issue was made with
respect to a benefit that the Company furnishes gratuitously and
which, by its own terms (and consistent with ERISA), never vests.
As emphasized at the outset of this opinion, the Medical Benefits
Plan expressly provides that neither employees’ nor retirees’
medical benefits ever vest and that the Company reserves the right
unilaterally to amend coverage or terminate it altogether. This
comports with ERISA’s provision that exempts employee welfare
41
Mississippi Power Co., 332 NLRB No. 52 (2000), 2000 WL
1504672, at *4 (emphasis added).
42
241 N.L.R.B. 869, 869 (1979).
34
benefit plans from that law’s vesting requirements.43 Thus, if
anything were to obligate the Company to continue the retirees’
medical insurance coverage or to maintain the type or terms of the
coverage (thereby negating the Company’s unilateral power to do so
despite the express reservation in the Medical Benefits Plan
itself), it would have to be found in some other document.
The MOA, as we have noted, does not mention medical benefits
at all and therefore cannot conceivably be the source of any
countervailing obligation on the Company’s part not to change
medical insurance benefits unilaterally. That leaves the Insurance
Side Letter as the only possible source of such a countervailing
Company obligation. The Insurance Side Letter, however, locks the
Company into only one obligation with respect to group medical
insurance: the level of the Company’s contribution to premiums
incurred during the term of the Side Letter Agreement. Therefore,
by deductive reasoning (inclusio unus est exclusio alterius), all
other aspects of the Medical Plan —— from the furnishing of medical
insurance vel non to the adjustment of discrete terms of the
selected insurance plan —— remain subject to the Company’s
unfettered, unilateral control. In sum, under the Medical Benefits
Plan, the Company had the right to make the changes to retirees’
medical insurance benefits unilaterally and to make them effective
on any current or future date that it chose; and no other document,
43
See 29 U.S.C. § 1051(1).
35
including the Insurance Side Letter, diminished or otherwise
affected this right.
Despite such reasoning, which gives effect to the reservation
of rights language in the Medical Benefits Plan, the Board has
taken the position that this clause should not be read to validate
the Company’s unilateral changes because the Unions did not accede
to those provisions, the Medical Benefits Plan having been
“unilaterally promulgated” by the Company. In support of this
contention, the Board asserts that the Medical Benefits Plan would
need to have been incorporated into the MOA, such that the parties
clearly bargained with respect to it, before the reservation of
rights clauses could be given effect. Not only is this sort of
reasoning unsound, it is at least arguable that when the Medical
Benefits Plan was adopted by the Company it was indeed incorporated
into the MOA ipso facto by the provisions of the pre-existing
Insurance Side Letter. More to the point, we find internally
inconsistent the Board’s statement that the medical insurance
benefits are mandatory subjects of bargaining but that the Unions
are free to disregard some of the express terms of the very
document that grants and defines those very benefits.
First, it is quite conceivable that the Insurance Side Letter
served to incorporate the Medical Benefits Plan into the MOA. The
Board asserts, citing Jeniso v. Ozark Airlines, Inc. Retirement
36
Plan for Agent and Clerical Employees,44 that a “mere mentioning”
of medical insurance does not suffice to incorporate a medical
benefits plan. We do not dispute this proposition; we do take
serious exception, however, with the Board’s characterization of
the Insurance Side Letter, which (1) addresses only medical
insurance matters, (2) results in an agreement entitled “Group
Medical Insurance Agreement,” and (3) is physically appended to and
printed with the MOA, as a “mere mentioning” of medical insurance.
Any objective reading of that contract refutes such trivializing.
Additionally, the Board’s assertion that the Insurance Side
Letter “fails even to mention the [Medical Benefits] Plan” is, on
these facts, scant support for the Board’s further argument against
incorporation —— that “there is no evidence that the Unions have
voluntarily ‘exercised their bargaining right.’”45 First, except
in the most hypertechnical sense, that statement is just plain
wrong: The Insurance Side Letter contains the words “Group Medical
Insurance Agreement” in boldface print immediately before the
signatures of the Unions’ representatives. Moreover, it unduly
stretches credence to imagine that in the course of bargaining over
the Company’s contribution to medical insurance premiums, the
Unions were somehow precluded from bargaining over the matter of
medical insurance generally. Regardless of whether they might have
44
187 F.3d 970, 973 (8th Cir. 1999).
45
Respondent’s Brief at 36, citing Department of Navy v.
FLRA, 962 F.2d 48, 57 (D.C. Cir. 1992).
37
succeeded, the Unions could have sought —— bargained for —— a
commitment from the Company not to terminate or amend the then-
current or any future medical benefits during the term of the MOA,
thereby limiting the unilateral reservation of rights clauses.
That they failed to do so or were unsuccessful, as the case may be,
does not mean that the Insurance Side Letter (which deals only with
medical insurance benefits) did not incorporate generically the
then-present and all future medical insurance plans that define the
scope of those benefits. Finally, the Insurance Side Letter could
not possibly have referred to the Medical Benefits Plan by name:
As the Board knows only too well, that particular plan did not even
go into effect until March 1, 1993, the calendar year following the
one in which the MOA and Insurance Side Letter were formed. In
sum, because medical benefits were substantially more than “merely
mentioned” in the Insurance Side Letter, and because the Medical
Benefits Plan defines those benefits, it is only logical to
conclude that the Company’s medical insurance plan was incorporated
by reference into the MOA by the Insurance Side Letter.
But even if the Medical Benefits Plan were not incorporated by
reference, we cannot disregard the fact that the Board premises its
entire unfair labor practice charge, as it must, on the contention
that future retirees’ medical insurance benefits are a mandatory
subject of bargaining because they fall within the category of
“wages, hours, and other terms and conditions of employment.” As
our earlier general discussion of OPRB changes demonstrates, we
38
accept this proposition.46 If medical insurance benefits are
mandatory subjects of bargaining, however, these terms and
conditions of employment must be defined by the Medical Benefits
Plan, the only document that describes them; and it is none other
than the Medical Benefits Plan that gives the Company the power
unilaterally to amend or terminate the benefits specified in it.47
It is irreconcilably inconsistent to argue that medical insurance
benefits, which are identified and delimited solely by the Medical
Benefits Plan, are a mandatory bargaining subject when such an
argument suits the Unions or the Board, but to insist that specific
provisions of the document defining these very benefits need not be
enforced when the Company is the one attempting to do so. The
46
See also W.W. Cross & Co., Inc., 174 F.2d 875, 878 (1st
Cir. 1949) (establishing that “the word ‘wages’ in...the Act
embraces within its meaning direct and immediate economic
benefits flowing from the employment relationship[, and] covers a
group insurance program”); Shane Felter Industries,
314 N.L.R.B. 339,
346 (asserting that “[a] health insurance plan is a benefit
constituting a term and condition of employment whether
established pursuant to a collective-bargaining agreement or
not”).
47
As noted above, see supra note 4, we do not mean to
suggest that, absent the Insurance Side Letter, the Unions would
not have had the right to seek to bargain over any unilateral
changes in medical benefits made by the Company pursuant to the
provisions in the Medical Benefits Plan. We only emphasize that
the Medical Benefits Plan describes all of the attributes of the
“term of condition of employment” of medical benefits. Having
waived the right to seek to bargain over the “matter of
insurance,” in the Insurance Side Letter, the Unions may not pick
and choose which attributes of the medical benefits their waiver
reaches.
39
dissent in T.T.P. Corp.48 addressed this incongruity succinctly:
The Trial Examiner correctly found that the
Retirement Income Plan was not physically part
of the collective-bargaining agreement[, and]
further stated that, “The Plan had been in
existence for years and had become an integral
part of the existing conditions of employment
on which the employees had a right to rely.”
The Respondent convincingly argues, however,
that it is impossible legally to justify the
Trial Examiner’s reasoning that, on one hand,
the clauses of the Plan providing benefits for
employees are a vested and expected right
governed by those provisions in the Plan,
while on the other hand disavowing the
“troublesome” termination clause found in
article IX which is as much a part of the Plan
as are any of the benefit clauses.49
We too reject the Board’s attempt to “cherry pick” the particular
provisions of the Medical Benefits Plan, choosing to advert to
those that work for it while ignoring those that do not, as
evidenced by the Board’s effort to cast medical insurance benefits
as mandatory subjects of bargaining, on the one hand, while
denying, on the other hand, that the Unions had acquiesced in the
Company’s reservation of rights clauses in the selfsame,
gratuitously-offered Plan.
To summarize, then, our response to the Board’s assertion that
any waiver by the Unions of their right to bargain over the “matter
of insurance” did not give the Company free rein to make
prospectively effective unilateral changes in future retirees’
48
190 N.L.R.B. 240 (1971).
49
Id. at 241 (Chairman Miller, dissenting) (emphasis
added).
40
medical benefits is this: It is accepted, even by the Board
itself, that there are two concomitant effects of waiver. One
effect is that the Unions relinquish their right to demand
bargaining on premium contributions and coverage changes by the
Company, which are the express subjects of the waiver. The second
effect of waiver is that the Company can make unilateral changes
(other than reducing its premium contributions) relating to those
subjects without any obligation to bargain with the Unions before
making them. Next, the Company had the right to make the
unilateral changes at issue because such changes affect benefits
furnished gratuitously by the Company under a plan that is subject
to no limitations except those spelled out in the Insurance Side
Letter, and then only as to the level of the Company’s contribution
to premiums. And last, in answer to any contention that the Unions
must have acceded to the reservation of rights language in the
Medical Insurance Plan before that reservation could be given
effect, we answer first that it is entirely possible that the
Insurance Side Letter incorporated the Medical Benefits Plan
(including its reservation of rights clause) into the MOA, and
second, that the Board, which argues so strenuously in favor of
these benefits being mandatory bargaining subjects, is poorly
positioned to take issue with particular provisions of the Medical
Benefits Plan that define these very benefits.
III. Conclusion
The Company’s challenge to the Board’s order, insofar as it
41
pertains to announced unilateral changes to future retirees’ life
insurance benefits, fails. The Board’s determination that future
retirees’ life insurance benefits constitute a mandatory subject of
bargaining is a reasonably defensible construction of the Act, and
the Company can point to no defenses, contractual or otherwise, for
its violation of the Act. The Company’s petition with respect to
life insurance benefits is therefore denied, and enforcement of the
Board’s order, insofar as it pertains to life insurance, is
granted.
As for medical insurance coverage, however, the Unions
expressly and unambiguously waived their right to bargain over any
changes. That waiver by its nature includes (or, at least fails to
exclude) prospective changes to medical insurance benefits of
future retirees, including at least potentially some currently
active employees of the Company. As the Company was thus justified
in refusing to bargain over the matter, the Company’s petition with
respect to medical insurance benefits is granted, that portion of
the Board’s order is set aside, enforcement of the Board’s order
insofar as it pertains to medical insurance is denied, and the case
is remanded to the Board for entry of appropriate orders consistent
with this portion of our opinion.
PETITION GRANTED IN PART AND DENIED IN PART; CROSS-PETITION DENIED
IN PART AND GRANTED IN PART; ORDER PARTIALLY SET ASIDE; and CASE
REMANDED with instructions.
42
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