Michael S. Mitchell (argued) Robert E. Larkin, III, Fisher & Phillips, New Orleans, LA, for Petitioner/Cross-Respondent, Dorsey Trailers.

Robert J. Englehart (argued) Charles P. Donnelly, Aileen A. Armstrong, National Labor Relations Board, Washington, DC, for Respondent/Cross-Petitioner, National Labor Relations Board.

Stephen A. Yokich (argued) United Auto Worker's International Union, Washington, DC, for Intervenor, Local 1868.

Before: GREENBERG and McKEE, Circuit Judges, and GREENAWAY,* District Judge.

OPINION OF THE COURT

GREENAWAY, Jr., District Judge.

The critical issue before this Court is whether petitioner Dorsey Trailers, Inc. ("Dorsey") violated the National Labor Relations Act (the "Act") when it entered into a subcontracting agreement without first negotiating with its employees' union representatives. The National Labor Relations Board (the "Board" or "N.L.R.B.") reversed the Administrative Law Judge's ("ALJ") conclusion that no such violation existed.

Dorsey now appeals the Board's Decision and Order which holds that Dorsey violated sections 8(a)(1) and (5) of the Act.1 Dorsey also appeals the Board's decision that it shall provide its union employees with lost overtime payments incurred as a result of the subcontracting violations. Cross-petitioner N.L.R.B. seeks enforcement of its order. This Court will grant the petition for review but will enforce the Board's Decision and Order in part.I. FACTS

Dorsey manufactures platform and dump trailers in its Northumberland, Pennsylvania plant.2 The United Auto Worker's International and its Local 1868 (the "Union") is the exclusive bargaining representative for Dorsey's production, maintenance and stock room employees.3 A collective bargaining agreement, effective from March 4, 1992 to March 1, 1995, governed the relationship between Dorsey and the represented employees.

On November 14, 1994, a trial was held before the Honorable Karl H. Buschmann, the administrative law judge assigned to this matter. The ALJ made the following findings of facts which provide the factual basis for our consideration:4

In 1993, in response to a rising backlog of work orders and increasing customer demand, the petitioner entered into an informal agreement with Bankhead Enterprises in Atlanta, Georgia, an independent company, which had the capability to produce flatbed and dump trailers. Pursuant to this informal agreement, the petitioner engineers the unit, purchases the material, and ships the material ... and engineering packages to Bankhead, which then supplies the labor for assembling the trailers. Prior to this arrangement, the petitioner had only shipped out parts for warranty purposes. Bankhead produces two trailers per week for the petitioner's customers located in Florida, Georgia, Tennessee, and North and South Carolina. The informal agreement also provides that Bankhead will not compete with the petitioner by producing trailers on its own. Profits are apportioned 60 percent to the petitioners and 40 percent to Bankhead. It is undisputed that the petitioner entered into this agreement and effectuated the agreement without prior notice to the Union and without bargaining with the Union at any time.

On August 9, 1993, the Union filed a "Charge Against Employer" with the Board alleging that Dorsey, in violation of sections 8(a)(1) and (5), engaged in unfair labor practices when it:

1) Unilaterally implemented revised "regular hours for shifts," specified in the parties collective bargaining agreement, and unilaterally revised contractual wages for three employees working Sunday 11PM to Monday 7AM shift. Employer negotiated changes directly with affected bargaining unit employees. The Employer also has denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with such changes.

2) Unilaterally implemented new job duties and the wages for such for bargaining unit employees working on what is referred to as light duty jobs. Employer negotiated changes directly with affected bargaining unit employees. The Employer has also denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with such changes.

3) Refused to bargain collectively with the undersigned labor organization concerning bargaining unit work being subcontracted and/or moved to Florida. The Employer has also denied and/or failed to provide within a reasonable time, relevant information which was requested in connection with the movement and/or subcontracting of such work.

On April 29, 1994, the General Counsel for the Board filed a Complaint and Notice of Hearing against Dorsey.

On February 15, 1995, the ALJ concluded that Dorsey's light duty transfer assignments, as well as its refusal to inform the Union of this practice, violated sections 8(a)(1) and (5). The ALJ dismissed the subcontracting element of the complaint premised upon his finding that the subcontracting agreement was not a subject of mandatory Union bargaining; however, he did find that Dorsey had violated sections 8(a)(1) and (5) based upon its refusal to provide the Union with requested information relevant to the subcontracting agreement.

The General Counsel and Dorsey filed exceptions to the ALJ decision and appealed to the Board. On July 5, 1996, the Board issued a Decision and Order adopting, with modification, the findings of the ALJ. In major part, the modification found that the subcontracting agreement was a subject of mandatory Union bargaining. In so finding, the Board wrote:

that the Respondent's decision to subcontract work was not a change in the "scope and direction" of its business going to a core entrepreneurial concern, but rather a direct replacement of the Northumberland unit employees by the Bankhead employees to perform unit work.

Dorsey Trailers, Inc., Northumberland, Pa. Plant, 321 N.L.R.B. 87, 88 (1996). The Board required Dorsey to rescind its subcontracting agreement.

On July 16, 1996, Dorsey petitioned this Court to review and set aside the Board's Decision and Order; the Board filed a cross-application for enforcement of its Order. On August 29, 1996, this Court granted the Union leave to intervene. On September 6, 1996, the Board granted the General Counsel's Motion to Modify Board Order, thereby requiring Dorsey to:

Make whole its employees, with interest, for any loss of earnings they may have suffered as a result of the Respondent's unlawful subcontracting of bargaining unit work, in the manner prescribed in Ogle Protection Service, 183 N.L.R.B. 682 (1970), enfd. 444 F.2d 502 (6th Cir.1971), and New Horizons for the Retarded, 283 N.L.R.B. 1173 (1987).

Preserve and, within 14 days of a request, make available to the Board or its agents for examination and copying, all payroll records, social security payment records, time cards, personnel records and reports, and all other records necessary to analyze the amount of backpay due under the terms of this Order.

Dorsey moves before this Court for a determination of whether there is substantial evidence to support the Board's findings that: (1) the agreement between Dorsey and Bankhead was a mandatory subject for bargaining under sections 8(a)(1) and (5); and (2) Dorsey must provide lost overtime payments to employees affected by the Dorsey/Bankhead agreement. Dorsey raises no other issues and no other issues are before this Court.5

II. STANDARD OF REVIEW

This Court shall employ plenary review as to matters of law. N.L.R.B. v. Greensburg Coca-Cola, 40 F.3d 669, 673 (3d Cir.1994). We will, however, afford the Board's construction of a statute some deference. Id. Therefore, this Court will "enforce a Board order that rests on a construction of the [Act] that is not 'an unreasonable or unprincipled construction of the statute.' " Id. (citations omitted); N.L.R.B. v. Alan Motor Lines, Inc., 937 F.2d 887, 890 (3d Cir.1991). Factual findings will be sustained if supported by the record as a whole. Alan Motor Lines, Inc., 937 F.2d at 890. This includes evidence supportive of the Board's decision, as well as evidence critical of it. Greensburg, 40 F.3d at 672.

III. PRELIMINARY MATTERS

As a preliminary matter, we must first discuss the nature of the agreement entered into by Dorsey and Bankhead. The respondent defines the agreement as an agreement to subcontract. On the other hand, petitioner, during the November 14, 1994 trial, described the agreement as a joint venture. The resolution of this distinction may have certain consequences since the case law in this Court requires that, under specific circumstances, a company must bargain with a union before making a decision to subcontract.6 We agree with the ALJ's finding that the agreement is one to subcontract.

Subcontracts occur "[w]here a person has contracted for the performance of certain work and he in turn engages a third party to perform the whole or a part of that which is included in the original contract." Black's Law Dictionary 324 (6th ed.1990). A joint venture is a legal entity in the nature of a partnership. Ringier America, Inc. v. Land O'Lakes, Inc., 106 F.3d 825, 828 (8th Cir.1997). It engages in the joint undertaking of a particular transaction for mutual profit, mutual control, mutual contribution and is memorialized in contract. Ringier, 106 F.3d at 828; Schiavone Const. Co. v. City of New York, 99 F.3d 546, 548-49 (2d Cir.1996).

Dorsey and Bankhead had a verbal agreement; there is no enforceable written contract. They did not form a separate legal entity and total control remained vested with Dorsey. Therefore, petitioner's insistence on defining the agreement as a joint venture is inappropriate.

IV. DISCUSSION

We now turn to the issue at hand--whether this particular subcontract is subject to mandatory union bargaining.

One of the Act's fundamental purposes is the "establishment and maintenance of industrial peace to preserve the flow of interstate commerce." First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666, 674, 101 S. Ct. 2573, 2578, 69 L. Ed. 2d 318 (1981). This purpose is accomplished by requiring management and labor to enter into peaceful settlement negotiations when disputes arise, in some instances. Fibreboard Paper Prod. Corp. v. N.L.R.B., 379 U.S. 203, 211, 85 S. Ct. 398, 403, 13 L. Ed. 2d 233 (1964).

In this vein, sections 8(a)(1) and (5) provide that it shall be an unfair labor practice for an employer to "refuse to bargain collectively with the representatives of his employees.... " 29 U.S.C.A. § 158(a) (West 1973). The obligation to bargain collectively is a mutual one. It requires the "employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.... " 29 U.S.C.A. § 158(d) (West 1973). Our first issue for decision here is the proper interpretation of the words "other terms and conditions of employment" and whether the Dorsey/Bankhead subcontract falls within its confines. The Supreme Court's opinion in Fibreboard is instructive on this issue.

In Fibreboard, the plaintiff subcontracted with a third party for maintenance work then being performed by Fibreboard's union employees. The High Court granted certiorari to determine:

Was petitioner [Fibreboard] required by the National Labor Relations Act to bargain with a union representing some of its employees about whether to let to an independent contractor for legitimate business reasons the performance of certain operations in which those employees had been engaged?

379 U.S. at 209, 85 S. Ct. at 402. The Court, focusing in narrowly on the facts before it, wrote that it was concerned "only with whether the subject upon which the employer allegedly refused to bargain--contracting out of plant maintenance work previously performed by employees in the bargaining unit, which the employees were capable of continuing to perform--is covered by the phrase 'other terms and conditions of employment' within the meaning of § 8(d)." Id. at 210, 85 S.Ct. at 402. The Court held that management's decision to subcontract can be a condition of employment and, under the circumstances before it, the prerequisites which implicate "other terms and conditions of employment" were satisfied and that collective bargaining was required. Id. at 210, 85 S.Ct. at 402.

In reaching its holding, the Court emphasized that Fibreboard's decision to subcontract did not affect its basic operations, nor was there an expenditure of capital required; rather, Fibreboard merely replaced Union workers with those of its subcontractor. 379 U.S. at 213, 85 S.Ct. at 404. Specifically, the Court wrote that it did

not [expand] the scope of mandatory bargaining to hold, as we do now, that the type of 'contracting out' involved in this case--the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment--is a statutory subject of collective bargaining under § 8(d). Our decision need not and does not encompass other forms of 'contracting out' or 'subcontracting' which arise daily in our complex economy.

379 U.S. at 215, 85 S. Ct. at 405. In sum, a decision to subcontract is not necessarily subject to mandatory collective bargaining; whether such bargaining is mandatory can only be answered by looking to the reasons underlying management's decision to subcontract and the decision's impact upon the employment relationship. See First National Maintenance Corp. v. N.L.R.B., 452 U.S. 666, 676-78, 101 S. Ct. 2573, 2579-81, 69 L. Ed. 2d 318 (1981); see also Fibreboard, 379 U.S. at 215, 85 S. Ct. at 405 (The Court refused to hold broadly that all subcontracting agreements must be submitted to union bargaining; rather, each situation should be judged on its particular facts.)

In First National, the Court further examined and defined the scope of sections 8(a)(5) and 8(d). It concluded that Congress purposely left ambiguous "other terms and conditions of employment" in anticipation of specific industry practices. The Court wrote of three types of management decisions which impact on the employment relationship--(1) those having only an indirect and attenuated impact on the employment relationship (i.e., advertising decisions); (2) those which are exclusively related to the employment relationship (i.e., layoff decisions); and (3) those which have a direct impact on employment, but whose focus is only on the economic profitability of the company. First National, 452 U.S. at 677, 101 S.Ct. at 2580 (relying upon Fibreboard, Stewart, J., concurring). The third category addresses the scope and direction of the company and not primarily the conditions of employment. Id.