Grinnell Fire Protection Systems Company v. National Labor Relations Board

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 GRINNELL FIRE PROTECTION SYSTEMS
COMPANY,
Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent,
SPRINKLER FITTERS LOCAL UNION 669,
United Association of Journeymen No. 99-1754 and Apprentices of the Plumbing
and Pipefitting Industry of the
United States and Canada, AFL-
CIO; UNITED ASSOCIATION OF
JOURNEYMEN AND APPRENTICES OF
THE PLUMBING AND PIPEFITTING
INDUSTRY OF THE UNITED STATES AND
CANADA, AFL-CIO,
Intervenors. 
 SPRINKLER FITTERS LOCAL UNION 669,
United Association of Journeymen
and Apprentices of the Plumbing
and Pipefitting Industry of the
United States and Canada, AFL-
CIO; UNITED ASSOCIATION OF
No. 99-1900  JOURNEYMEN AND APPRENTICES OF
THE PLUMBING AND PIPEFITTING
INDUSTRY OF THE UNITED STATES AND
CANADA, AFL-CIO,
Petitioners,
v. 

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 NATIONAL LABOR RELATIONS BOARD,
Respondent,
 GRINNELL FIRE PROTECTION SYSTEMS
COMPANY,
Intervenor. 
 NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
GRINNELL FIRE PROTECTION SYSTEMS
COMPANY, SPRINKLER FITTERS LOCAL
UNION 669, United Association of
Journeymen and Apprentices of the No. 99-2212  Plumbing and Pipefitting Industry
of the United States and Canada,
AFL-CIO; UNITED ASSOCIATION OF
JOURNEYMEN AND APPRENTICES OF
THE PLUMBING AND PIPEFITTING
INDUSTRY OF THE UNITED STATES AND
CANADA, AFL-CIO,
Respondents. 
On Petitions for Review and Cross-application of
Orders of the National Labor Relations Board.
(5-CA-24521, 5-CA-25227, 5-CA-25406)
Argued: June 8, 2000
Decided: December 29, 2000
Before NIEMEYER and KING, Circuit Judges, and
Irene M. KEELEY, United States District Judge
for the Northern District of West Virginia, sitting by designation.
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Petitions for review denied and cross-application for enforcement
granted by published opinion. Judge King wrote the opinion, in which
Judge Keeley concurred. Judge Niemeyer wrote a concurring and dis-
senting opinion.
COUNSEL
ARGUED: Joel Harvey Kaplan, SEYFARTH, SHAW, FAIR-
WEATHER & GERALDSON, Chicago, Illinois, for Grinnell. David
Arthur Fleisher, Senior Attorney, NATIONAL LABOR RELATIONS
BOARD, Washington, D.C., for Board. William Walter Osborne, Jr.,
OSBORNE LAW OFFICES, P.C., Washington, D.C., for Local 669,
et al. ON BRIEF: Christopher A. Weals, Charles F. Walters, SEY-
FARTH, SHAW, FAIRWEATHER & GERALDSON, Washington,
D.C., for Grinnell. Leonard R. Page, General Counsel, Linda Sher,
Associate General Counsel, Aileen A. Armstrong, Deputy Associate
General Counsel, NATIONAL LABOR RELATIONS BOARD,
Washington, D.C., for Board. Robert Matisoff, Nicholas Femia,
O’DONOGHUE & O’DONOGHUE, Washington, D.C., for Local
669, et al.
OPINION
KING, Circuit Judge:
Grinnell Fire Protection Systems Company ("Grinnell") petitions
this Court, pursuant to 29 U.S.C. § 160(f), to review the decision of
the National Labor Relations Board (the "Board") that Grinnell
engaged in unfair labor practices, in violation of the National Labor
Relations Act ("the Act"). The Board, by its May 28, 1999 Decision
and Order ("Order"),1 upheld the decision of its Administrative Law
Judge ("ALJ").2 The Order determined that Grinnell’s implementation
1The Board decision appealed from is Grinnell Fire Prot. Sys. Co., 328
N.L.R.B. No. 76, 1-7 (May 28, 1999).
2The ALJ’s decision can be found at Grinnell, 328 N.L.R.B. No. 76
at 7-25.
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of its final contract offer, after failing to reach a collective bargaining
agreement ("agreement") with the representative of its employees,
constituted an unfair labor practice because "there was no impasse in
bargaining."
Grinnell’s employees are represented by Local 669 ("Local 669")
of the United Association of Journeymen and Apprentices of the
Plumbing and Pipe Fitting Industry (collectively "the Union"). The
Union also petitions for our review of the Order insofar as the Board
concluded that Grinnell did not engage in unfair labor practices prior
to the company’s implementation of its final contract offer. For the
reasons explained below, we deny the petitions for review filed by
Grinnell and the Union, and we grant the Board’s cross-application
for enforcement of its Order.
I.
After its unsuccessful attempt to negotiate a new agreement with
the Union, Grinnell, on April 14, 1994, declared an impasse and
implemented its final contract offer. Immediately thereafter, the
Union filed unfair labor practice charges against Grinnell with the
Board. Our summary of the relevant facts underlying this dispute,
recounted below, is largely drawn from the ALJ’s decision of January
16, 1997.
A. BACKGROUND
Grinnell, a subsidiary of Tyco International Ltd. ("Tyco"), is
engaged in the design, fabrication, sale, and installation of fire sprin-
kler systems. For many years, Grinnell had been represented in its
collective bargaining with the Union by a multiemployer bargaining
group known as the National Fire Sprinkler Association (NFSA), a
trade association of over 150 fire sprinkler contractors. In 1992, the
Union had instituted a program known as "targeting" to assist signa-
tory contractors, including Grinnell, in competing with lower-cost
non-union contractors. Under the Union’s targeting program, the par-
ties were sometimes able to negotiate concessionary wage rates,
which permitted a NFSA member to pay lower wages or other bene-
fits to journeyman fitters on a project-by-project basis in certain geo-
graphical areas. Jobs that included targeting of wages were referred
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to as "targeted" jobs. Under the program, the Union retained final
authority to grant an employer’s request to target a project with a
reduced rate.
From the inception of the targeting program, Grinnell, the largest
fire sprinkler manufacturer and installer in the United States, had been
its primary user. However, in May 1993, the Union added a new
requirement to its targeting program: in order to participate in target-
ing after June 1, 1993, a company was obliged to commit to remain
part of the NFSA multiemployer bargaining group through negotia-
tion of the next agreement (or, in the alternative, consent to be bound
by the agreement negotiated between the Union and NFSA effective
April 1, 1994).
Grinnell declined to accept this new condition; as a result, the
Union withdrew Grinnell’s participation from the targeting program.
Grinnell responded with a letter, dated September 22, 1993, in which
it revoked NFSA’s bargaining authority, provided notice of termina-
tion of the existing agreement between the parties (due to expire
March 31, 1994), and requested immediate negotiations with the
Union for a new agreement.
B. THE NEGOTIATIONS
1. The Early Negotiations
On January 28, 1994, Grinnell provided the Union with a proposal
for a new agreement, its first proposal following Grinnell’s revocation
of NFSA’s bargaining authority. This proposal contained significant
changes to the existing agreement in the areas of wages, job classifi-
cations, benefits, and pension plans.3
Grinnell and the Union thereafter entered into contract negotia-
tions, with the first session being conducted on March 17, 1994, in
Bethesda, Maryland. At this first session, Grinnell’s counsel, Peter
3According to Grinnell, the changes embodied in this proposal were
designed to address concerns over its declining market share to non-
union competition, because overall labor costs under its agreement with
the Union were considerably higher than those of non-union operations.
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Chatilovicz, acted as its chief negotiator. Chatilovicz explained Grin-
nell’s reasons for withdrawing bargaining authority from NFSA, and
he expressed the company’s desire that, by bargaining independently
with the Union, it would be able to reach an agreement that would
resolve its major competitive problems. Grinnell then presented a new
proposal to the Union, revised somewhat from its January 28, 1994
proposal.
Under its revised proposal of March 17, Grinnell would possess the
option to apply targeting to any project where there was non-union
competition. The fixed targeting rate would be tied to the journeyman
wage rate in the particular state, but it would be no lower than 65%
of that rate. Chatilovicz made clear to the Union that Grinnell’s goal
was to control targeting, rather than leave the matter to the Union’s
discretion. Grinnell also proposed replacing the existing benefits plan
with one common to Tyco employees. While the parties engaged in
no other significant discussions, they reached consensus that any new
agreement would be for a term of three years. The Union requested
an overnight recess so that it could study Grinnell’s revised proposal.
The parties met again the next day, March 18, to discuss Grinnell’s
revised proposal. During this meeting, Grinnell offered to increase the
minimum targeting rate to 75% of the journeyman wage rate, up from
the prior offer of 65%. The applicability of these rates would not to
be subject to grievance procedures, but would be within Grinnell’s
sole discretion to impose — immune from all review by the Union
absent allegations that the company had misused its targeting author-
ity. The Union did not then indicate whether it could accept Grinnell’s
targeting terms, but it did present a counter wage proposal calling for
incremental annual increases in the journeyman hourly rate and a $.25
increase in the differential for foremen. The parties agreed to meet
again in ten days, on March 28, 1994.
Shortly thereafter, an important change of circumstances occurred.
On March 22, 1994, the Union issued to its members a strike notice
directed at Grinnell and NFSA. Upon receiving the notice, Grinnell
sought a five-day renewable extension of the existing agreement,
which the Union denied. By letter dated March 24, 1994, Grinnell
informed its employees that, in the event of a strike, it would hire per-
manent replacement workers. Ensuing controversy within the Union
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caused its president to place Local 669 in trusteeship, and the negoti-
ating session scheduled for March 28, 1994, was cancelled.
Effective March 28, 1994, Tommy Preuett, a former president and
business manager of Local 669, was appointed as the Union’s trustee.
As trustee, Preuett was empowered to manage the Union’s affairs,
including the negotiation of new agreements with NFSA, Grinnell,
and other independent contractors.
2. Preuett Begins to Bargain4
On March 30, 1994, the first bargaining session between Grinnell
and the Preuett-led Union took place in New York City.5 Because
Preuett had not attended the earlier sessions, Grinnell reviewed its
reasons for revoking NFSA’s bargaining authority and seeking
improved terms in a new agreement with the Union. Grinnell also
expressed concern that the Union would reach an agreement with
NFSA that failed to address its problems, then expect Grinnell to
accept the terms of the NFSA agreement, or one substantially similar.
Preuett was conciliatory, stating that the Union wanted to work
with Grinnell to achieve an agreement, that it did not want a strike,
and that a strike was not planned for April 1, 1994. Additionally, Pre-
uett asserted that the Union was against a uniform targeting rate
because the resultant loss of flexibility would permit non-union con-
tractors to anticipate Grinnell’s wage expense and adjust for it. On
health and welfare benefits, Preuett related that the Union was reluc-
tant to accept the Tyco plan because it lacked portability and reciproc-
ity, and also because Tyco did not provide health coverage for
retirees. Chatilovicz responded that Grinnell understood the Union’s
apprehension and that Grinnell was "not wedded" to the Tyco plan.
However, Grinnell wanted an agreement that would nonetheless cut
4As explained further in Part III.B.3, infra, the ALJ found that "under
the circumstances, the only bargaining sessions that should be considered
in determining the impasse question were those in which Preuett repre-
sented the Union." Grinnell, 328 N.L.R.B. No. 76 at 13.
5This session occurred one day before the existing agreement between
the Union and NFSA was to expire. The Union was negotiating with
NFSA on the same date at the same hotel.
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its costs of providing health, welfare, and pension benefits. Preuett
asked Grinnell for a thirty-day extension of the existing agreement.
Grinnell refused, indicating that it wanted to finish bargaining as soon
as possible.
3. The April 7, 1994 Session
The next bargaining session was held on April 7, 1994, in New
York City, with Preuett again representing the Union. Three separate
mini-sessions actually occurred that day — in the morning, in the
afternoon, and in the evening. On that same day, the Union was again
conducting negotiations for a new agreement with NFSA at the same
hotel.
a.
During the morning session on April 7, Preuett presented a com-
plete proposal on behalf of the Union. This proposal called for the
same wage increases included in the Union’s previous offer, and it
proffered a targeting plan whereby a Union agent and a Grinnell rep-
resentative in each geographical district would establish a target rate
for the following year based on the local marketplace, with a mecha-
nism to protect Grinnell from arbitrary action by Union representa-
tives. This proposal, however, would not be accomplished until a new
agreement was in effect, and it would not guarantee the targeting rates
that Grinnell desired.
The Union’s proposal also provided for continued company contri-
butions to health, welfare, and pension plans, as well as industry pro-
motion and training funds contributions. Under the Union’s proposal,
the employer’s contribution to the health and welfare fund would
have been frozen at a $3.75 per-hour rate for the term of the agree-
ment; pension contributions would have remained at the prevailing
rate of $2.20 in 1994, $2.30 in 1995, and $2.40 in 1996; with a flat
$.75 contribution to supplemental pension funds ("SIS") in the states
where they existed. After a break in the morning session, Grinnell
made a detailed response to the Union’s proposal, continuing to insist
that any agreement include a fixed targeting rate of 75%. Grinnell
also wanted reduced health, welfare, and pension contributions, and
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it again expressed its desire to eliminate all contributions to SIS,
industry promotion, and training funds.
b.
During the afternoon session on April 7, the Union proposed a
freeze on wage rates for the term of the agreement. It further proposed
that, within sixty days, a committee would meet to set targeting rates
for the next year and, after a review of the results, for the following
year as well. The Union also proposed separate rates for industrial,
commercial, and residential jobs; health and welfare contributions of
$3.75, $3.50, and $3.25 per- hour over the three years of the agree-
ment; a $.50 per-hour SIS contribution, where applicable, in the first
year, with $.10 increases in each of the two succeeding years; and a
reduced training fund contribution. Following an afternoon break,
Grinnell again countered, reiterating its proposal that there be a fixed
targeting rate of 75%, with the rate to be reviewed and possibly
adjusted after a year. It offered a choice between the Tyco health plan
and a $2.25 per-hour contribution to another health plan acceptable
to the Union. In the pension area, Grinnell proposed to implement
either its Tyco 401(k) plan or to make a $1.20 per-hour contribution
to another plan, with no SIS contributions.
c.
The parties recessed on the afternoon of April 7, reconvening that
evening for a third mini-session. The Union then offered amended
proposals on the hiring of apprentices, overtime, and training fund
contributions, proposing a contribution of $2.20 per-hour to the pen-
sion plan, a $.50 SIS contribution for the three-year term of the agree-
ment, and health and welfare contributions of $3.75, $3.40 and $3.40
per-hour. After an evening break, Grinnell indicated that it would
agree to the Union’s overtime and training fund proposals, along with
some of the language on apprentices, but stressed that targeting had
to be under its control. Chatilovicz prepared a chart outlining the
remaining issues, including wages/targeting, health and welfare, pen-
sion, and SIS.
4. The April 8, 1994 Session
The next bargaining session was conducted on April 8, 1994, again
at the New York City hotel where Preuett and the Union were negoti-
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ating simultaneously with NFSA. On that occasion, Preuett proposed
a targeting agreement under which Grinnell could lower wages on
certain types of projects, but Grinnell reiterated the importance of a
fixed targeting rate and stated that the 75% proposal was "final[.]"
Preuett responded that the Union was flexible on "economics," but
needed to retain "control of its destiny" in approving the targeting
rates.
The parties also discussed the other open issues. The Union stated
that its primary goal was that benefits be uniform and flexible. It indi-
cated a desire to do further research on the proposed Tyco 401(k) plan
and decide whether it was "doable." Preuett also stated that, while
there were issues the parties did not agree on, the Union was there to
achieve an agreement. The April 8 session ended with an understand-
ing that the parties would again meet on April 12, with Grinnell ask-
ing for specific responses from the Union on the issues of targeting,
benefits, and SIS.
5. The Last Session: April 12, 1994
The bargaining session of April 12, 1994, was held at the Union’s
offices in Washington, D.C.6 During this April 12 session, Chatilovicz
told Preuett to "stop bullshitting," accused him of "playing games,"
and suggested getting a federal mediator to resolve matters. Preuett
denied that he was playing games, stated that the Union wanted uni-
formity in the industry and had made proposals to this end, and
asserted that the Union was making concessions on several issues.
Chatilovicz agreed that Preuett had made some movement, but asked
for the Union’s best proposal. Chatilovicz then averred that he recog-
nized the Union’s desire for uniformity and that he would not be sur-
prised if Preuett needed to have the same agreement the Union had
reached with NFSA.
Preuett was accompanied to the April 12 session by Paul Green, a
benefits expert. Green asked a series of questions of Grinnell about
the Tyco benefits plans. After a short while, Chatilovicz asserted that
6Of importance, on April 8, 1994, the Union and NFSA had reached
an agreement. Grinnell was aware of this fact on April 12, 1994, and it
knew the details of the agreement.
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Grinnell understood that the Union was not inclined to move away
from the uniform health and welfare plan and that the Union was not
interested in the Tyco plan; Chatilovicz also responded angrily to
what he considered to be Green’s unwelcome intrusion into the nego-
tiations. Preuett explained that the Union had concerns about the Tyco
plan. When Chatilovicz asked if there were any way the Union could
accept the Tyco plan, Preuett responded that he was not sure, but the
Union was not yet saying "no."
Green continued to ask questions, but Chatilovicz brushed them
aside, convinced of Preuett’s disinterest in the Tyco plan. Preuett con-
tradicted Chatilovicz’s perception, noting that the parties were bar-
gaining. Chatilovicz responded that if the Union wanted to bargain it
should "stop the bullshit." Chatilovicz asserted that if the Union
wanted to propose the benefits package from the NFSA agreement
then Preuett should do so, but it was insulting to bring in Green to
pick at the Tyco plan. After a discussion of the wage rates contained
in the new agreement the Union had made with NFSA, Chatilovicz
again asserted that he knew the Union wanted a uniform agreement.
Preuett retorted that the Union did not want targeting rates determined
by fixed percentages.
Following a lunch break on April 12, 1994, Grinnell presented the
Union with its "final proposal" on the remaining issues. This proposal
called for a freeze in wage rates for foremen at the 1994 level, a fixed
targeting rate of 80% of the journeyman wage on any job with com-
peting non-union bidders, the Tyco health plan with some modifica-
tions, the Tyco 401(k) plan with a $200 per-year service credit, up to
a maximum of $1000, and no SIS contributions. Chatilovicz advised
Preuett that if the Union could not accept this proposal, it should give
Grinnell its best and final proposal. Preuett said the Union would con-
sider it.
After a ninety-minute break, the Union made another counterpro-
posal to Grinnell, resubmitting its health, welfare, and pension pro-
posals, and offering reductions in the commercial wage rates for
targeted jobs of $1 in thirty states and $1.50 in another seventeen
states. Preuett maintained that this proposal would lower Grinnell’s
costs tremendously, making it more competitive, and that the Union
was willing to meet indefinitely in an effort to achieve an agreement.
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Chatilovicz indicated that Grinnell would examine the proposal on the
assumption that it was the Union’s last offer. In response, Preuett
expressly asserted that this proposal was not the Union’s last offer,
that the Union desired to reach an agreement, and that he was flexible.
Preuett asserted that Chatilovicz had mentioned absolute and final
offers, trying to push the bargaining to an impasse. From the Union’s
standpoint, however, an impasse was undesirable, and Preuett vowed
not to give up easily.
Chatilovicz acknowledged that both parties had worked hard to
reach an agreement but that, while the Union’s proposal provided
some savings, it was not enough. Chatilovicz then informed Preuett
that he would be in his office in the event the Union changed its view.
Preuett asked how far apart they were and in which states Grinnell
needed movement. After the parties discussed the differences in the
wage rates, this bargaining session terminated.
At about 6 p.m. that evening, Preuett telephoned Chatilovicz at the
latter’s office. When Preuett suggested another meeting the following
day, Chatilovicz asked what the Union was going to propose. Preuett
responded that he would attempt to get Grinnell to raise its rates. In
response, Chatilovicz asserted that the Union had Grinnell’s final pro-
posal and Grinnell was not willing to change further with respect to
wages and benefits. Preuett asked about bringing in a federal media-
tor, but Chatilovicz claimed that mediation would be futile unless the
Union was willing to come down to Grinnell’s proposed rates. Preuett
asked if Grinnell’s rates were "carved in stone," and Chatilovicz
assured him that they were. Preuett then said that he hoped Grinnell
would change its view, and "maybe they could get together down the
road." Grinnell, 328 N.L.R.B. No. 76 at 12.
Later that evening, the Union called a nationwide strike against
Grinnell. Thereafter, by letter of April 13, 1994, Grinnell informed
both its employees and the Union that it was implementing its final
contract offer, effective the next day, and further indicated that it
would hire permanent replacements for striking employees.
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C. THE BOARD PROCEEDINGS
On April 15, 1994, the Union filed unfair labor practice charges
with the Board against Grinnell, alleging, among other things, that the
company had failed to bargain in good faith. The Union specifically
asserted that Grinnell had unlawfully implemented its final contract
offer before the parties had reached a good faith impasse. The Board’s
General Counsel, on receiving the Union’s charges, issued a com-
plaint dated March 29, 1995.7 The allegations were that Grinnell had
engaged in violations of sections 8(a)(1), (3), and (5) of the Act.8
The ALJ conducted a proceeding consisting of twenty-two days of
hearings, commencing on October 16, 1995, and ending on March 28,
1996. The ALJ then found that "no genuine impasse [in bargaining]
existed." Grinnell, 328 N.L.R.B. No. 76 at 14. The decision of the
ALJ, filed January 16, 1997, found violations against Grinnell under
sections 8(a)(1) (for implying to striking workers that they would be
permanently replaced), and 8(a)(5) (for implementing its final con-
tract offer before impasse had been reached). The ALJ recommended
dismissal of the section 8(a)(3) charge of unlawfully discharging
striking employees, based on his conclusion that Grinnell’s April 13,
1994 letter did not constitute an effective discharge. Thereafter, on
May 28, 1999, a divided Board entered the Order affirming, inter
alia, the ALJ’s finding that Grinnell "violated Section 8(a)(5) and (1)
7Amended complaints were filed on September 29 and December 1,
1995.
8These sections of the Act provide in pertinent part as follows:
It shall be an unfair labor practice for an employer—
(1) to interfere with, restrain, or coerce employees in the
exercise of the rights [to engage in labor activities] . . .;
. . .
(3) by discrimination in regard to hire or tenure of employ-
ment or any term or condition of employment to encourage
or discourage membership in any labor organization . . .;
. . .
(5) to refuse to bargain collectively with the representatives
of his employees . . . .
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of the Act by unilaterally changing terms and conditions of employ-
ment through the implementation of its final contract offer when there
was no impasse in bargaining." See Grinnell, 328 N.L.R.B. No. 76 at
1.
II.
We review the Order to determine if it is supported by substantial
evidence on the record as a whole. Universal Camera Corp. v. NLRB,
340 U.S. 474 (1951). Substantial evidence is "such relevant evidence
as a reasonable mind might accept as adequate to support a conclu-
sion." NLRB v. Peninsula Gen. Hosp. Med. Ctr., 36 F.3d 1262, 1269
(4th Cir. 1994) (quoting Consolidated Edison Co. of New York v.
NLRB, 305 U.S. 197, 229 (1938)). We have recognized that while
"substantial evidence" is more than a scintilla, it may also be less than
a preponderance. AT&T Wireless PCS, Inc. v. City Council of City of
Virginia Beach, 155 F.3d 423, 430 (4th Cir. 1998); NLRB v. Grand
Canyon Mining Co., 116 F.3d 1039, 1044 (4th Cir. 1997). With
regard to the Board’s application of the law to the facts, a reviewing
court must affirm the Board’s conclusions if they are reasonable and
consistent with the Act. NLRB v. Yeshiva Univ., 444 U.S. 672, 691
(1980).
We accord due deference to the reasonable inferences that the
Board draws from the evidence, NLRB v. Brown, 380 U.S. 278, 292
(1965), regardless of whether we might have reached a different con-
clusion in the first instance. Universal Camera, 340 U.S. at 488. Of
course, courts "remain the final authorities on issues of statutory con-
struction." Shanty Town Assocs. Ltd. v. EPA, 843 F.2d 782, 790 (4th
Cir. 1988).
III.
A.
Defining the section 8(a)(5) obligation "to bargain collectively,"
section 8(d) of the Act requires, among other things, that the
employer and employees "meet at reasonable times and confer in
good faith with respect to wages, hours, and other terms and condi-
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tions of employment . . . but such obligation does not compel either
party to agree to a proposal or require the making of a concession."
29 U.S.C. § 158(d). See generally NLRB v. American Nat. Ins. Co.,
343 U.S. 395 (1952). Because the duty to bargain does not impose an
obligation to agree, at some point during bargaining a party may con-
clude that further meetings and discussions will not produce an agree-
ment and it can declare that an impasse has been reached. If the party
declaring an impasse does so in good faith, and if its conclusion is
justified by objectively established facts, then the statutory duty to
bargain collectively is satisfied. See Laborers Health and Welfare
Trust Fund for Northern California v. Advanced Lightweight Con-
crete Co., 484 U.S. 539, 544 n.5 (1988); AMF Bowling Co., Inc. v.
NLRB, 63 F.3d 1293, 1299 (4th Cir. 1995).
Generally speaking, section 8(a)(5) of the Act prohibits an
employer from unilaterally instituting changes regarding wages,
hours, and other terms and conditions of employment before reaching
a good-faith impasse in bargaining. NLRB v. Katz, 369 U.S. 736, 747
(1962). An impasse exists when the collective bargaining process has
been exhausted and, "despite the parties’ best efforts to reach an
agreement, neither party is willing to move from its position."
Excavation-Construction, Inc., 248 N.L.R.B. 649, 650 (1980). A
party claiming an impasse as the basis for its unilateral actions bears
the burden of proving that an impasse in negotiations actually existed.
Tom Ryan Distributors, Inc., 314 N.L.R.B. 600, 604 (1994).
Determining whether an impasse in bargaining was actually
reached is obviously an inquiry that is fact-intensive. Even though the
historical circumstances surrounding the various negotiations in this
dispute are generally uncontroverted, the ultimate question of whether
an impasse existed on April 12, 1994, can only be answered by evalu-
ating and weighing that evidence, and by examining the relevant legal
authorities. As the Court of Appeals for the District of Columbia has
recognized, the question of the existence of an impasse is one "of fact
involving the Board’s presumed expert experience and knowledge of
bargaining problems." Dallas Gen. Drivers Local Union No. 745 v.
NLRB, 355 F.2d 842, 844 (D.C. Cir. 1966). Indeed, the court recog-
nized that "few issues are less suited to appellate judicial appraisal . . .
or better suited to the expert experience of a board which deals con-
stantly with such problems." Id. at 844-45.
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B.
The relevant criteria for determining the existence of an impasse
were explicitly identified by the Board in Taft Broadcasting Co., 163
N.L.R.B. 475, 478 (1967):
The bargaining history, the good faith of the parties in nego-
tiations, the length of the negotiations, the importance of the
issue or issues as to which there is disagreement, the con-
temporaneous understanding of the parties as to the state of
negotiations are all relevant factors [the trier of fact should
consider] in deciding whether an impasse [existed.]
Id. at 478. We review those criteria seriatim.
1. Bargaining History
Although the parties here — Grinnell and the Union — have a rela-
tionship that goes back several decades, this was the first instance
where Grinnell was bargaining independently and directly with the
Union. In the past, Grinnell had committed itself to bargain through
and be bound by the NFSA. As the ALJ correctly found, such a short
bargaining history "would dictate giving the parties a fuller opportu-
nity to effect an agreement than occurred here." Grinnell, 328
N.L.R.B. No. 76 at 12. This is especially true considering the exten-
sive changes to the benefits and wages of the employees that Grinnell
was proposing. See Harding Glass Co., 316 N.L.R.B. 985, 991
(1995).
2. Good Faith and Length of Negotiations
We accept the view of the ALJ and the Board that, prior to the uni-
lateral implementation of its final contract offer, Grinnell bargained
in good faith with the Union.9 See AMF Bowling, 63 F.3d at 1299.
In AMF, we stated that good faith is a "powerful fact" weighing in the
employer’s favor, "from which we may infer that [the employer]
made a bona fide effort to reach agreement." Id. However, section
9See infra Part IV.
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8(a)(5) of the Act can be violated by an employer "without also find-
ing the employer guilty of over-all subjective bad faith." Katz, 369
U.S. at 747.
Although Grinnell bargained with the Union in good faith, on April
12, 1994, against the background of the agreement reached between
the Union and NFSA (and Grinnell’s understanding of the conse-
quences of that agreement), the negotiations between Grinnell and the
Union clearly changed. Notwithstanding that Preuett had been bar-
gaining on behalf of the Union for only two weeks, and in that period
significant progress had been made, Grinnell was unwilling to negoti-
ate further. During Preuett’s stewardship, there were only four bar-
gaining sessions, totalling "no more than 13 hours of actual
bargaining with much of the 4-hour session on March 30 devoted to
introductions and general discussion." Grinnell, 328 N.L.R.B. No. 76
at 13.10
Of course, the limited duration of the relevant negotiations does
not, standing alone, contravene our conclusion that Grinnell negoti-
ated in good faith until April 13, 1994, when it unilaterally imple-
mented its final contract offer. See, e.g., Lou Stecher’s Super Markets,
275 N.L.R.B. 475, 476-77 (1985) (good faith impasse existed after
only three bargaining sessions). However, the brevity of the relevant
bargaining period gives the factual determination that no impasse
existed — made by both the ALJ and the Board — a pronounced
appearance of reasonableness.
3. Importance of the Issues Remaining
In support of its assertion that negotiations had reached impasse,
Grinnell points to allegedly unresolvable issues that remained,
emphasizing the significance of those issues. It also points out that,
when the issues separating the parties are of great importance to one
or both of them, a finding of impasse is more likely. See Hyatt
10The ALJ determined that the negotiations that included Preuett were
the probative events. Indeed, as noted supra at note 4, the ALJ found that
"the only bargaining sessions that should be considered in determining
the impasse question were those in which Preuett represented the Union."
We agree.
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Regency Memphis, 296 N.L.R.B. 259, 315-16 (1989), enforced, 944
F.2d 904 (6th Cir. 1991) ("[impasse] may be reached even after a few
bargaining sessions where the subject of the change is of supreme
importance to an employer with respect to its ability to compete.").
Here, Grinnell urges that it repeatedly sought wage relief and a new
targeting program that would give it (rather than the Union) the uni-
lateral right to reduce wages on jobs with non-union bidders. Grinnell
consistently maintained that a fixed targeting rate was essential for a
settlement. The Union, on the other hand, insisted on retaining the
right to control targeting. Purporting to have seen no movement on
these key issues, Grinnell made its final contract offer to the Union
on April 12, 1994. This offer increased the targeting rate and
enhanced health and pension benefits. The Union countered with a
proposal substantially similar to the one it had made earlier that day,
with minor modifications. Based on its perception that the Union was
not making any movement, Grinnell argues that it "reasonably and
objectively concluded that the parties were deadlocked."
Grinnell’s characterization of the negotiations is unavailing. As the
Board properly concluded, this was a typical labor dispute over a
"matter of dollars," and there was no reason to believe that the parties’
disagreements could not be resolved with further bargaining. Indeed,
the parties had made significant strides towards reaching an agree-
ment during the period that Preuett functioned in his role of chief
Union negotiator. For example, Grinnell had increased its proposed
targeting rate from 65% to 80%. On health, welfare, and pension con-
tributions, Grinnell had retreated from its proposal to implement the
Tyco regime, indicating that it would accept the Union’s proposal if
the company’s contributions were reduced.
The Union had also demonstrated continuing willingness to com-
promise. It had made two proposals that reduced Grinnell’s health,
welfare, pension, and SIS contributions. It had also brought in Green,
a benefits expert, to study the Tyco plan.11 On wages, the Union had
proposed that local wage rates be fixed by mutual agreement, and it
later dropped a proposal for a wage increase. Lastly, at the final bar-
11Grinnell’s own expert acknowledged that Green’s questions were
proper.
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gaining session on April 12, 1994, the Union proposed wage reduc-
tions in some states and asked for identification of those states where
Grinnell needed further reductions. In sum, on April 12, 1994, as the
Board found, the Union’s positions were clearly flexible. Further
negotiations could well have led to an agreement encompassing all
the outstanding issues.12
4. Contemporaneous Understanding of the Parties
Grinnell insists that an impasse existed on April 12, 1994, because,
in its view, the Union would not accept an agreement whose terms
differed significantly from those in the Union’s new agreement with
NFSA. Grinnell also asserts that the Union’s only concern was to pre-
serve uniformity within the industry by forcing Grinnell to agree to
the same terms as those found in the NFSA agreement. According to
Grinnell, the Union’s strategy was to close the deal with NFSA first,
and then demand that Grinnell accept the NFSA deal. Indeed, Grin-
nell argues that the Union was wedded to the agreement it had already
signed with NFSA, and therefore could offer only the proposals and
terms contained therein. Grinnell believes that this position is indica-
tive of the Union’s unwillingness to compromise, and therefore man-
dates a finding of impasse.
Grinnell’s depiction of the Union’s position finds no objective
basis in the facts determined by the ALJ and the Board. The Union
never proposed that Grinnell simply accept the terms of the NFSA
agreement. As the Board recognized, "the Union continued to demon-
strate its willingness to compromise by giving [Grinnell] proposals
12That both Grinnell and the Union wanted control of targeting, and
that Grinnell saw this as an important issue, does not compel a different
conclusion here. The parties agreed on the most important aspect of the
targeting program — the standard to be used in determining which jobs
were targeted. Significant progress was made on the rates and benefits
that Grinnell would pay for targeted jobs. Furthermore, the targeting pro-
gram had been implemented successfully for years prior to the Union’s
removal of Grinnell’s participation. Given this history and that the par-
ties were in accord on many of the details of the targeting program, the
Board’s determination that a compromise on targeting was still possible
is amply supported by the evidence.
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which differed from those in the NFSA agreement." Grinnell, 328
N.L.R.B. No. 76 at 2. Furthermore, the Board correctly found Grin-
nell’s contention undermined by the Union’s refusal to accede to a
"most favored nation" clause in the NFSA agreement.13 "By not
agreeing to such a clause in the NFSA contract, Preuett would be able
to give concessions to [Grinnell] without eroding the employees’
terms and conditions of employment with NFSA employers." Grin-
nell, 328 N.L.R.B. No 76 at n.4.
The record strongly supports the conclusions of the ALJ and the
Board that the Union remained open and willing to negotiate on April
12, 1994. The Board, in reaching its determination in this regard,
relied on the following: (1) during the final session on April 12, the
Union continued to declare its intention to be flexible; (2) when Cha-
tilovicz stated that Grinnell would treat a proposal offered by the
Union at that point to be the Union’s final offer, Preuett explicitly
denied that assertion; (3) Preuett made specific inquiries about "how
far apart the parties were" and "in which states [Grinnell] needed
movement on wage rates"; (4) after Grinnell rejected the Union’s pro-
posal, Chatilovicz told Preuett that he would be in his office until 6:00
p.m., giving Preuett his telephone number if he wanted to talk further;
(5) Preuett took Chatilovicz up on this offer, phoning him at 6:00 p.m.
to request a meeting the following day; (6) during this conversation,
Preuett expressed the Union’s continued desire to have Grinnell raise
its proposed wage rates;14 and (7) Preuett suggested that the parties
possibly resort to federal mediation.
13A "most favored nation" clause would have obligated the Union to
give the NFSA employers any concession that was given to Grinnell.
See, e.g., Associated Milk Dealers v. Milk Drivers Union Local 753, 422
F.2d 546 (7th Cir. 1970).
14The parties dispute exactly what was said during this conversation on
the evening of April 12, 1994. However, in a crucial credibility finding,
the ALJ concluded that "during this conversation, Preuett did not say that
he would not lower his proposed wage rates and benefits. Rather, he said
that he was not willing to agree to the rates in [Grinnell’s] final offer."
Grinnell, 328 N.L.R.B. No. 76 at 2 (emphasis in original). We must of
course defer to the credibility finding of the ALJ. "It is normally not the
role of reviewing courts to second-guess a fact-finder’s determinations
about who appeared more ‘truthful’ or ‘credible.’" Fieldcrest Cannon,
Inc. v. N.L.R.B., 97 F.3d 65, 71 (4th Cir. 1996).
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The Board correctly observed that Grinnell’s asserting of its "final
position" did not, by itself, require a finding of impasse. Grinnell, 328
N.L.R.B. No. 76 at 1 (citing, inter alia, PRC Recording Co., 280
N.L.R.B. 615, 640 (1986), which held that for impasse to occur, both
parties must be unwilling to compromise, enforced, 836 F.2d 289 (7th
Cir. 1987)). Indeed, the Board reasoned that "it would be both errone-
ous as a matter of law and unwise as a matter of policy for the Board
to find impasse merely because the [Union] is unwilling to capitulate
immediately and settle on [Grinnell’s] unchanged terms." Grinnell,
328 N.L.R.B. No. 76 at 2. This conclusion is consistent with prece-
dent such as Powell Elec. Mfg. Co., 287 N.L.R.B. 969 (1987), where
the Board held that futility, rather than mere frustration, discourage-
ment, or apparent gamesmanship, is necessary to establish impasse.
Id. at 973. Put simply, Grinnell’s argument of impasse is premised on
its own unwillingness — rather than that of the Union — to compro-
mise. As the Board stated, "[A]ssuming arguendo that [Grinnell] has
demonstrated it was unwilling to compromise any further, we find
that it has fallen short of demonstrating that the Union was unwilling
to do so." Grinnell, 328 N.L.R.B. No. 76 at 2.15
Grinnell also argues that, despite Preuett’s stated intention, further
negotiations would have been futile, since "important issues"
remained where no progress had been made. Furthermore, according
to Grinnell, the olive branches offered by the Union on the last day
of negotiations, i.e., incremental wage improvements, did not demon-
strate a genuine willingness to compromise on the crucial issues. The
Board has repeatedly held that inconsequential modifications that fail
15The dissenting Board Member asserted that the decision of the Board
"will allow the parties to create or defeat impasse simply by self-
declaration." Grinnell, 328 N.L.R.B. No. 76 at 9. That concern may be
valid: just as impasse cannot be declared by fiat, it cannot be avoided
simply by a self-serving statement that no impasse exists. Nonetheless,
because the standard is an objective one, the possibility of unilateral
avoidance is remote. That an evaluation of the objective evidence often
encompasses subjective determinations does not increase the risk of
caprice. If a party is willing to negotiate to a point that an agreement
might be reached, no impasse exists. And we can hardly conceive of bet-
ter evidence of a party’s willingness to satisfactorily negotiate further
than its clear statement to that effect.
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to address the heart of the employer’s demands cannot forestall
impasse. See Prentice-Hall, Inc., 306 N.L.R.B. 31 (1992); Times-
Herald, 223 N.L.R.B. 505 (1976). Accordingly, Grinnell maintains
that the Board’s characterization of the Union’s last offer as a "signif-
icant concession" was erroneous.
Grinnell, however, inappropriately downplays the importance of
the Union’s concessions to reach an agreement. As the Board found,
these concessions constituted significant progress towards the goal
desired by Grinnell — lower wages for competitive commercial con-
tracts. Grinnell, 328 N.L.R.B. No. 76 at 2. On April 12, 1994, the
Union made a detailed proposal offering significant discounts varying
by states, which Grinnell rejected. Preuett asked Grinnell to identify
the states in which the company required a larger discount, but Grin-
nell refused to consider this inquiry. Instead, Grinnell declared the
existence of impasse, despite the Union’s clearly expressed intentions
to reach an agreement. Grinnell, 328 N.L.R.B. No. 76 at 2.
As the ALJ and the Board both found, Preuett earnestly desired to
reach an agreement, believed an agreement could be reached, and
continued to explore negotiations and options in pursuit thereof. Any
suggestion to the contrary necessarily contemplates that Preuett made
his statements of April 12 concerning the Union’s desire for an agree-
ment either in bad faith (contemplating the legal ramifications and
trying to avoid impasse), or without actual understanding of Grin-
nell’s position. There is simply no support in the record for either
such finding, and we decline to second-guess the ALJ and the Board
by divining one.
5. Conclusion
In the context of the record here, and in light of the deferential
standard of our review of the Order, we must conclude that the
Board’s finding that "there was no impasse in bargaining" is sup-
ported by substantial evidence.
C.
On April 13, 1994, Grinnell sent a letter to all its employees,
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informing them of the strike by the Union and their right to remain
working. Grinnell’s letter explained that all employees had the right
to resign their union membership, and even if they did not resign they
could remain working. It also informed the employees of Grinnell’s
intention to hire permanent replacement workers.16 The Union, in its
initial complaint to the Board on April 15, 1994, alleged that Grin-
nell’s letter threatened the employment status of its employees engag-
ing in the strike, in violation of sections 8(a)(1) and (3). The ALJ
agreed and found an unfair labor practice by Grinnell in this connec-
tion. The Board then affirmed the ALJ with no discussion.17 Section
8(c) of the Act protects an employer’s right to communicate with its
16Grinnell’s letter to its employees of April 13, 1994, stated in part:
We just learned that the Union has called a strike against Grin-
nell. Although the Union has the right to strike, Grinnell has the
right to run its business. Grinnell must do so in order to meet its
commitments to its customers and to keep those customers from
going elsewhere. We also have an obligation to those employees
who want to work.
Each of our employees has the right to work and may do so
even though a strike has been called. As we told you before, if
you are a union member and you choose to work, you may be
fined unless you resign your membership. If you resign you may
not be fined. Also, if the strike ends, you will have the right to
continue working for Grinnell so long as you pay your dues.
If some of our employees strike, we will hire permanent
replacements to perform our work. Permanent replacements have
the right to work even if a strike ends.
17The ALJ found, however, and we agree, that Grinnell’s letter did not
constitute a "constructive discharge" of striking employees in violation
of section 8(a)(3). The Union appeals this ruling, asserting that this case
is indistinguishable from Noel Foods Div. of Noel Corp., 315 N.L.R.B.
905, 907-08 (1994), where the Board found constructive discharge when
the employer falsely advised employees on the eve of strike that they
"would be permanently replaced" at its commencement. The statement
was false because insufficient replacements had been obtained to replace
all the potential strikers.
By contrast, Grinnell’s letter contained no false statements. Rather, the
letter simply informed the employees that they were subject to permanent
replacement in the event of a strike.
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employees, as long as the employer’s statements do not contain a
"threat of reprisal or force or promise of benefit." Section 8(c)’s pro-
tection has been extended to an employer’s right to inform employees
of its intention to hire permanent replacements in the event of a strike.
Eagle Comtronics, Inc., 263 N.L.R.B. 515, 515 (1982).
Because the ALJ concluded that the Union’s strike was an "unfair
labor practice" strike — in which case the striking employees would
have the right to be reinstated — the ALJ also found that Grinnell’s
letter threatened the employment status of the strikers by implying
that they could be permanently replaced. That is, Grinnell’s letter was
threatening because it did not specify that Grinnell could hire perma-
nent replacements only in the event of an "economic" strike. The
ALJ’s conclusion was correct, and we will enforce the Board’s Order
in this regard.18
IV.
The Union also petitions for our review of the Order, asserting that
Grinnell failed to bargain in good faith from the outset of the negotia-
tion process. According to the Union, Grinnell was not interested in
reaching an agreement; rather, it was attempting to "obliterate its
longstanding union relationship." Grinnell, 328 N.L.R.B. No. 76 at
13.
The Board’s finding of good faith bargaining "must be upheld
unless the determination has no rational basis in the record." Albritton
Communications Co. v. NLRB, 766 F.2d 812, 817 (3d Cir. 1985). In
this case, the ALJ found that the evidence failed to establish that
Grinnell’s bargaining prior to its premature termination of negotia-
tions was in bad faith. This determination by the ALJ was premised
on several factors: (1) Grinnell’s proposals on wages and benefits
were not so unreasonable or harsh as to warrant a finding that they
were put forward to frustrate the bargaining process; (2) Grinnell
made modifications and concessions during the negotiations; and (3)
18The Board also affirmed the ALJ’s findings of additional violations
that are not contested in this Court. We thus enforce the uncontested
aspects of the Order as well. See NLRB v. Cast-a-Stone Products Co.,
479 F.2d 396, 398-99 (4th Cir. 1973).
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Grinnell made itself available and accommodated the Union with
respect to the timing and location of negotiation sessions.
An employer does not violate its duty to bargain in good faith
merely by seeking reductions in existing wages and benefits. See, e.g.,
Brooks, Inc., 251 N.L.R.B. 757, 763 (1980). Nor does Grinnell’s deci-
sion to pay eight of its nonstriking employees (out of 1100 to 1200
bargaining unit employees) higher wage rates than those set forth in
its final offer constitute bad faith. While the ALJ found Grinnell’s
action in this regard to constitute a separate violation of the Act, Grin-
nell, 328 N.L.R.B No. 76 at 23, this finding did not lead either the
ALJ or the Board to conclude that Grinnell acted in bad faith. We
agree with the Board that, in light of the small number of affected
employees, and the instigation of the violative conduct by a district
manager disassociated with the negotiations between Grinnell and the
Union, the evidence does not mandate a finding of bad faith on the
part of Grinnell. See Grinnell, 328 N.L.R.B. No. 76 at 22-23; Litton
Systems, Inc., 300 N.L.R.B. 324, 330 (1990), enforced, 949 F.2d 249
(8th Cir. 1991).
The Board’s finding that Grinnell acted in good faith prior to its
premature implementation of its final contract offer is supported by
substantial evidence. There is no legal basis for us to disrupt this find-
ing, and we decline to do so.
V.
We find no reason to disturb the Board’s careful analysis of these
complicated labor negotiations, and we conclude that the Order of the
Board is supported by substantial evidence. We thus deny Grinnell’s
petition for review. We grant the Board’s cross-application for
enforcement of its Order and deny the Union’s petition for review.
PETITIONS FOR REVIEW DENIED AND
CROSS-APPLICATION FOR ENFORCEMENT GRANTED
NIEMEYER, Circuit Judge, concurring in part and dissenting in part:
I concur in Part IV of the majority’s opinion and dissent from the
remainder.
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On the principal question presented for review in this case —
whether the parties to collective bargaining negotiations reached an
impasse thereby entitling the company to implement its final contract
offer made to the union — the majority opinion collapses the issues
in negotiation without focusing on the two issues which were essen-
tial to agreement and on which no progress was made during negotia-
tions. For legitimate business reasons, the company in this case
determined (1) that it had to control the targeting of authorized wage
reductions to meet nonunion competition without any union veto and
(2) that the targeting had to be authorized by the collective bargaining
agreement at a fixed, uniform rate. When the eye is kept on these
issues during the negotiations, the conclusion follows, by a straight-
forward application of governing law, that an impasse was reached in
this case. I would for that reason grant the company’s petition for
review and deny the union’s cross-petition for review.
I
Grinnell Fire Protection Systems Company ("Grinnell"), a subsid-
iary of Tyco International Ltd. ("Tyco"), designs, manufactures, and
installs fire sprinkler systems throughout the United States and is the
largest such business in the country. Grinnell’s employees have been
represented by several locals of the United Association of Journey-
men and Apprentices of the Plumbing and Pipefitting Industry of the
United States and Canada ("the International Union"), and the largest
of these is Local 669 (sometimes "the Union"), which represents
approximately 1,200 Grinnell employees in 47 states. Until Septem-
ber 1993, Grinnell was represented in collective bargaining negotia-
tions by the National Fire Sprinkler Association ("NFSA"), a multi-
employer trade association consisting of about 150 companies. The
last contract negotiated for Grinnell by the NFSA was effective from
April 1, 1991, through March 31, 1994.
In September 1993, more than six months before the expiration of
its contract with the Union, Grinnell gave the Union written notice by
letter that it was revoking the NFSA’s authority to bargain on its
behalf and wished to negotiate independently with the Union for a
new contract. During the 1990s, Grinnell became concerned about its
profits and declining market share and believed that NFSA was either
"unwilling or unable" to do what was necessary to control costs and
26 GRINNELL FIRE PROTECTION SYSTEMS v. NLRB

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keep unionized contractors competitive. Indeed, to stem the loss of
business to nonunion contractors, Local 669 had instituted a job "tar-
geting" program which allowed Grinnell, as well as other signatories
to the NFSA agreement, to negotiate concessionary wage rates with
the Union on a project-by-project basis to meet nonunion competition.
Under the program, however, the Union retained discretionary control
over the decision to grant or deny an employer’s request to target a
particular project with a concessionary wage rate. Grinnell had been
the principal user of the targeting program until May 1993, when the
Union added the requirement that a company wishing to participate
in the targeting program had to commit to be bound by the next
NFSA multi-employer collective bargaining agreement. When Grin-
nell refused to agree to this condition, the Union denied the company
participation in the targeting program. In July 1993, after Local 669
elected a new business manager, that manager reinstated Grinnell as
a participant in the targeting program, but the Union again excluded
Grinnell from the program after Grinnell withdrew from the NFSA
authority to negotiate a collective bargaining agreement on Grinnell’s
behalf.
In its September 22 letter to the Union, Grinnell expressed its wish
to begin negotiations "immediately to reach an agreement that is com-
petitive and provides in the future for full employment for our Com-
pany’s employees and your union members." Less than two months
later, on November 12, 1993, Grinnell’s representatives met infor-
mally with the Union and outlined the contours of Grinnell’s bargain-
ing position in preparation for formal contract negotiations. Grinnell
described a need to make changes to remain competitive in the face
of changing local market conditions. It indicated that it would seek,
among other things, to pay wages competitive with the local markets
in which the company operated, to employ on certain projects a
higher ratio of unskilled workers to skilled journeymen, to pay lower
contributions to the health and welfare plan, and to freeze the current
pension plan and institute a 401(k) plan. Grinnell and the Union
agreed to begin formal negotiations at a meeting they scheduled for
January 18, 1994.
Before the next meeting, however, controversy developed within
Local 669, leading its president and secretary-treasurer to ask the
International Union to place the local in trusteeship. The International
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Union appointed Tommy Preuett to serve as trustee of Local 669.
Because of these internal difficulties, the Union canceled the sched-
uled January negotiating session with Grinnell. Grinnell, which had
become aware of the Union’s internal problems, sent a written pro-
posal to the Union in lieu of attempting at that time to schedule a bar-
gaining session. This "1st Proposal for a New Collective Bargaining
Agreement" was accompanied by a letter in which Grinnell stated:
Although the unionized companies in our industry have had
some good years, it is clear that we are headed for a steep
decline if we don’t make some changes now. The figures
throughout the U.S. show that we are losing market share to
our non-union competition. This is because our overall labor
costs under the Local 669 contract are so much higher than
what our competition is paying. Wages in some locations,
health care costs and our inability to effectively use appren-
tices and helpers present major problems for Grinnell.
The proposal included a provision that would give Grinnell control
over the wage rate, within a specified range, to pay journeymen in
each state to meet nonunion competition. Grinnell’s choice of wage
rates from within the specified range would be "a function of the local
economic conditions." This proposal differed most significantly from
the previous "targeting" program that the Union had instituted by giv-
ing Grinnell, instead of the Union, the discretion to target projects
with lower wage rates. Grinnell also proposed to create a new job cat-
egory of unskilled "helpers," who would be paid "as determined by
Grinnell," and the ratio of skilled fitters to unskilled workers could
change from 2:1 to 1:1. Finally, in the area of pension and health ben-
efits, Grinnell proposed to replace the existing National Automatic
Sprinkler Industry ("NASI") health and pension plans with Tyco’s
health and 401(k) plans.
Three days after Grinnell sent the Union its first contract proposal,
Grinnell’s lawyer and chief negotiator, Peter Chatilovicz, and Grin-
nell’s president, Jerry Boggess, met with the Union’s lawyer, William
Osborne, to discuss Grinnell’s first proposal informally. Chatilovicz
explained to Osborne that Grinnell was seeking "institutionalize[d]
targeting," which would allow Grinnell discretion unilaterally to
reduce Union fitters’ wage rates to a "targeting rate" for projects on
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which the company faced nonunion competition. The wage-rate range
within which Grinnell would be able to set a targeting rate would be
specific to each state, and as set out in Grinnell’s proposal, would
have a floor fixed at 65% of the standard journeyman wage rate in
each state.
Following these various informal meetings between Grinnell and
the Union and Grinnell’s submission of its first proposal, which
defined the main issues for negotiation, the parties conducted six for-
mal negotiating sessions before Grinnell declared that the parties were
at an impasse.
First formal negotiating session — March 17, 1994. As this was
the first session, Grinnell’s president, Boggess, explained to the
Union’s business manager, John Lundak, as well as Osborne and two
other Union representatives, his views concerning the future of the
industry, and Chatilovicz explained Grinnell’s reasons for withdraw-
ing bargaining authority from the NFSA. Chatilovicz said that, in bar-
gaining independently with Local 669, Grinnell was seeking an
agreement that would resolve the key competition issues that it faced.
He then presented Grinnell’s second proposal for agreement, which,
in the area of targeting, provided for a fixed maximum wage-rate
reduction to be implemented by Grinnell, in its discretion, for any
project on which Grinnell faced nonunion competition. The fixed tar-
geting rate would be no lower than 65% of the journeyman wage rate
in each state. In explaining the key elements of the proposal, Cha-
tilovicz stated that Grinnell "wanted control of targeting." The parties
did not engage in any significant negotiations concerning wages or
health and pension benefits, but they did agree to a three-year term
for the next contract and discussed other issues such as inspection and
subcontracting. The Union indicated that it needed time to study the
proposals before discussing them further.
Second formal negotiation session — March 18, 1994: The parties
again discussed Grinnell’s targeting proposal, which Grinnell then
modified, increasing the minimum targeting rate from 65% to 75% of
the journeyman wage rate. In response to a Union query, Grinnell
indicated that, under its proposal, targeting decisions would not be
subject to grievance procedures and would rest within the sole discre-
tion of the company. But the company did allow that a Union-
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employer committee might be set up to review any allegations that
Grinnell misused its targeting authority on particular projects. Grin-
nell asked for a response to its targeting proposal, and the Union
responded that it did not yet have a full response. Before concluding
the session, however, the Union presented a wage proposal calling for
yearly increases in the hourly journeyman rate and an increase in the
wage differential for foremen.
Third formal negotiating session — March 30, 1994. Before this
session, the Union had rejected Grinnell’s request for a five-day
renewable contract extension and had sent Grinnell a strike notice. In
response, Grinnell had stated that in the event of a strike, it would hire
permanent replacement workers. Also before this third session, the
International Union had designated Preuett as trustee of Local 669,
and he now appeared on behalf of the Union at this session. Because
Preuett was a newcomer, Chatilovicz again outlined Grinnell’s rea-
sons for withdrawing bargaining authority from the NFSA and the
issues that were important to Grinnell, namely, the fixed minimum
targeting wage rate institutionalized in the agreement at 75% of the
regular journeyman rate, the 1:1 ratio of journeymen to unskilled
workers, and the changes in the health and pension plans that Grinnell
had proposed. Chatilovicz also expressed his concern that Preuett
would reach an agreement with the NFSA that did not address Grin-
nell’s concerns and then would expect Grinnell to accept a similar
agreement. Preuett indicated that he was at that time and in the same
hotel conducting negotiations with the NFSA and that he would
explore whether, based on Grinnell’s larger size, the Union could
offer Grinnell some things it did not offer the NFSA contractors. On
the issue of targeting, Preuett indicated that he was opposed to a uni-
form targeting rate because nonunion contractors could learn the rate
and bid under it. When Preuett expressed concerns about the Tyco
health plan, Chatilovicz responded that Grinnell was "not wedded" to
it. Preuett said he had no problem with the change in the ratio of jour-
neymen to apprenticemen. As they closed this session, Preuett asked
for a 30-day extension of the existing contract, but Grinnell responded
that it did not want negotiations to drag out for weeks and refused the
request.
Fourth formal negotiating session — April 7, 1994. The Union
presented Grinnell with its first complete contract proposal. This pro-
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posal included the same wage increases that the Union had proposed
at the third session and included a targeting proposal that did not grant
Grinnell control over wage-rate targeting. Rather, the proposal pro-
vided that representatives of the parties would agree to a targeting
wage rate, but not until after the new contract went into effect, and
that Grinnell would not be guaranteed any particular rates. The
Union’s proposal also called for Grinnell to continue its contributions
to the NASI health and pension plans. Grinnell responded to the
Union proposal, continuing to insist that any agreement include a
fixed minimum targeting wage rate of 75% of the standard journey-
man rate. It also proposed either the Tyco health and 401(k) plans or
reduced contributions by Grinnell to the NASI plans. The parties con-
tinued to negotiate and discuss wage regimes and adjustments. While
Grinnell insisted on a minimum targeting wage rate of 75% of the
journeyman rate for the first year of the contract, it allowed for the
possibility of rate adjustments after the first year. Grinnell, however,
continued steadfastly to insist that any agreement confer on the com-
pany discretion to target wages at a fixed, uniform rate. The parties
went back and forth with the proposals concerning employer contri-
butions to the health, welfare, and pension plans: Preuett proposed
successively lower employer contributions, and Grinnell proposed
either the Tyco health plans or the NASI plans with further reductions
in contributions. At the end of the session, Grinnell prepared a chart
listing the issues the parties had yet to resolve.
Fifth formal negotiating session — April 8, 1994. The parties again
discussed targeting, and Preuett proposed a regime under which Grin-
nell could lower wage rates on certain types of projects — commer-
cial and residential. Chatilovicz insisted on an across-the-board
targeting rate at a fixed 75% of the journeyman in wage rate, to be
triggered unilaterally by Grinnell when it faced nonunion competition
on a particular project. Chatilovicz explained to the Union, as
recorded in notes taken at the session, "The hard news is that we are
not giving [the] union control of this. We are not walking away from
[the] table with [the] union in control." Chatilovicz stated that the
company’s proposal was its "final proposal" on the targeting issue.
Preuett indicated that the Union was "open on . . . economics," but
that it "want[ed] flexibility" and "need[ed] some control of its destiny
on targeting. The union sets the standard." The parties also discussed
other issues. Preuett said that his primary goal was that health and
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pension benefits be portable and uniform, if possible, among Grinnell
and the other NFSA employers. Preuett asked about Tyco’s 401(k)
plan and indicated he wanted to research it further. The parties agreed
to meet again on April 12, 1994, and Chatilovicz asked Preuett for
specific responses to Grinnell’s proposals concerning (1) health and
pension benefits and (2) uniform, fixed minimum wage-rate targeting
at the discretion of Grinnell for all projects with nonunion bidders.
Sixth formal negotiating session — April 12, 1994. By this meeting
the Union had reached agreement with the NFSA (on April 8), and
Grinnell had become aware of the details of the agreement. Following
exchanges on the issue of inspections and Chatilovicz’s charge that
Preuett was "playing games," Chatilovicz suggested that the parties
employ a federal mediator to resolve the remaining issues. Preuett
protested that he was not playing games, that he wanted uniformity
in the industry, and that he had made proposals to accomplish this as
well as concessions on several issues. Chatilovicz asked Preuett for
the Union’s best proposal, expressing his understanding that Preuett
was interested in uniformity and might not be able to offer Grinnell
an agreement with terms different from the agreement that the Union
had reached with the NFSA. Preuett brought a benefits expert to the
meeting to discuss the Tyco plans and indicated that he was not pre-
pared to discuss the plans until the expert had studied them further.
On wages, Preuett stated that he wanted a wage-rate freeze with no
fixed-percentage targeting reductions, again referring to the Union’s
proposal, which had been incorporated in the NFSA agreement and
under which commercial and residential wage rates would be lower
than the standard industrial rates. After a lunch break, Chatilovicz
presented Grinnell’s "final proposal" on open issues. This proposal
included a targeting rate fixed at 80% of the journeyman rate for any
project with competing nonunion bidders; the Tyco health plan with
no standard employee contribution for the first year; the Tyco 401(k)
plan with a service credit; and rejection of the Union’s proposal for
contributions by Grinnell to the supplemental pension fund. The
Union made a counterproposal, resubmitting its previous benefits pro-
posals and offering reductions in wage rates for commercial projects
amounting to $1.00 in 30 states and $1.50 in 17 states. Preuett later
conceded that the wage rates offered to Grinnell were "close" to those
incorporated in the NFSA agreement, and Chatilovicz testified that
the difference between the proposal and the terms of the NFSA agree-
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ment amounted to $.50 in three states. Chatilovicz indicated that he
would consider the Union’s last offer to be its final proposal and
rejected it, saying that Grinnell was not interested in the NFSA agree-
ment. He indicated that he would be in his office until that evening
in case Preuett changed his mind. Preuett said that he had not yet
made the Union’s final offer and that Chatilovicz was trying to push
him into impasse but that he would not give up easily. The parties dis-
cussed the difference between Grinnell’s targeting wage-rate proposal
and the Union’s wage-rate proposal in some of the states and then
broke off the meeting.
Following the sixth formal negotiating session, during the evening
of the same day — April 12 — Preuett called Chatilovicz and asked
to meet again the following day. Chatilovicz inquired what the Union
planned to propose, and Preuett responded that he hoped to get Grin-
nell to raise its proposed wage rates. Chatilovicz said that Grinnell’s
proposal was its final offer and that it would not alter its proposed
wage rates or benefit plans. When Preuett suggested that the parties
bring in a federal mediator, Chatilovicz asked if Local 669 was will-
ing to come down to Grinnell’s wage rates. Preuett responded that the
Union would not agree to Grinnell’s wage rates, and Chatilovicz said
that, in that case, a mediator would not help them reach agreement.
Chatilovicz stated that Grinnell’s position was carved in stone, to
which Preuett responded that he hoped Grinnell would change its
position and negotiations would resume later.
Later that same evening, Preuett called a nationwide strike against
Grinnell, and on the following day, Grinnell declared that the parties
had reached an impasse and that Grinnell was therefore implementing
its final contract offer. Grinnell sent a letter to its employees dated
April 13, 1994, explaining the impasse, announcing the implementa-
tion of its last proposal, and indicating that it would hire permanent
replacements for striking employees.
The next day, on April 14, 1994, Local 669 and the International
Union filed unfair-labor-practice charges against Grinnell, alleging,
among other things, that Grinnell failed to bargain in good faith,
unlawfully unilaterally instituted its final offer before the parties
reached a good-faith impasse in their negotiations, and unlawfully
discharged Union members in its April 13 letter. Based on these
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charges, the Regional Director of the National Labor Relations Board
("Board") issued a complaint alleging that Grinnell had committed
violations of § 8(a)(1), (3), and (5) of the National Labor Relations
Act ("NLRA"), 29 U.S.C. § 158(a)(1), (3), (5).
Following a 22-day hearing, the Administrative Law Judge ("ALJ")
concluded that Grinnell had bargained in good faith before declaring
an impasse but that the parties had not reached a good-faith impasse
in their negotiations. Accordingly, the ALJ found that Grinnell vio-
lated § 8(a)(5) of the NLRA by implementing its final offer and that
the Union strike was an unfair-labor-practice strike. The ALJ also
found that Grinnell violated § 8(a)(1) of the NLRA by implying to the
striking workers in the April 13 letter that they could be permanently
replaced, but he recommended the dismissal of the allegation that the
company had in that letter unlawfully discharged the striking employ-
ees. The ALJ recommended the entry of an order that Grinnell cease
and desist from its unlawful conduct and take specified affirmative
action to remedy it.
By a 2-1 vote, the Board adopted the ALJ’s finding that the parties
had not reached an impasse on April 12, 1994. See Grinnell Fire Pro-
tection Sys. Co., 328 N.L.R.B. No. 76, at 1 (May 28, 1999). As a
result, the Board found that Grinnell committed unfair labor practices
when it refused to bargain further with the Union, when it unilaterally
changed the terms and conditions of employment by implementing its
final contract offer, and when it indicated it would hire permanent
replacements for the striking workers. The Board also adopted the
ALJ’s findings that Grinnell had bargained in good faith and did not
effectively discharge its employees in its April 13 letter, which
informed them of its plan to implement its final offer because negotia-
tions were at an impasse. Finally, the Board found additional unfair
labor practices, which Grinnell has not contested before this court.
The Board’s decision on the impasse issue relied on Preuett’s
numerous representations that the Union had not yet given Grinnell
its final offer and remained flexible. The Board pointed to Preuett’s
"continued willingness to bargain by raising the possibility of Federal
mediation" during his evening phone call to Chatilovicz on April 12,
1994. Id. at 2. The Board also drew support from its precedent in
which no impasse had been found, despite the fact that one party at
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the bargaining table had asserted that it had reached its final position
and the other had not yet offered specific concessions. See, e.g., Rich-
mond Recording Corp., 280 N.L.R.B. 615, 640 (1986), enforced, 836
F.2d 289 (7th Cir. 1987).
The dissenting Board member concluded that the majority had
"misapplied the law concerning bargaining impasse in a most deleteri-
ous way." Grinnell Fire Protection, 328 N.L.R.B. No. 76, at 4 (Hurt-
gen, dissenting). This member pointed out that "[t]he Union was
unwilling to give [Grinnell] the unilateral right to lower wages on a
particular job. In addition, the Union wanted uniformity among
employers." Id. at 6. He also observed that the targeting control issue
was not only a key issue for both sides but also "a matter of princi-
ple," on which "neither party was willing to yield." Id.
From the Board’s decision, Grinnell petitioned for review, chal-
lenging the Board’s finding that an impasse had not been reached.
The issues on which I disagree with the majority are (1) whether
Grinnell prematurely declared an impasse; and (2) whether Grinnell
committed an unfair labor practice by sending its April 13 letter to
striking employees informing them that the negotiations had reached
an impasse, that it intended to implement its final contract offer, and
that it would hire permanent replacements for striking employees. I
address these in turn.
II
Section 8(a)(5) of the NLRA makes it an unfair labor practice for
an employer "to refuse to bargain collectively with the representatives
of his employees." 29 U.S.C. § 158(a)(5). The obligation to bargain
collectively imposes a duty on an employer to meet with the represen-
tatives of his employees at reasonable times and "confer in good faith
with respect to wages, hours, and other terms and conditions of
employment." 29 U.S.C. § 158(d). The obligation, however, "does not
compel either party to agree to a proposal or require the making of
a concession." Id.; see also NLRB v. American Nat’l Ins. Co., 343
U.S. 395, 402 (1952) ("The Act does not compel any agreement what-
soever between employees and employers").
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An employer’s duty to bargain in good faith obliges it "to honor the
terms and conditions of an expired collective bargaining agreement
pending negotiations on a new agreement." Laborers Health & Wel-
fare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539,
544 n.6 (1988) (citing NLRB v. Katz, 369 U.S. 736, 743 (1962)); see
also Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 199 (1991)
(referring to this duty as the "unilateral change doctrine"). If parties
reach an impasse in their negotiations, however, "the employer’s stat-
utory duty to maintain the status quo during post-contract negotiations
. . . end[s]." Laborers Health & Welfare Trust Fund, 484 U.S. at 543
n.5 (citing American Ship Bldg. Co. v. NLRB, 380 U.S. 300, 318
(1965)). An impasse occurs, and an employer’s duty to negotiate is
satisfied, "when the parties in good faith reach a point in their discus-
sions where further meetings and discussions objectively appear to be
futile." AMF Bowling Co. v. NLRB, 63 F.3d 1293, 1301 (4th Cir.
1995).
On the issue of impasse in this case, we are not presented with dif-
fering factual accounts material to the question of whether an impasse
occurred. Of course, when the record contains differing factual
accounts, we are bound to defer to the Board’s findings of fact. See
29 U.S.C. § 160(e); Universal Camera Corp. v. NLRB, 340 U.S. 474,
488 (1951); AMF Bowling Co., 63 F.3d at 1301. But here, we have
a set of historical circumstances that are essentially uncontroverted by
the parties. One side, emphasizing particular facts, contends that an
impasse was properly declared; the other side emphasizing other
facts, contends that an impasse was not properly declared. The resolu-
tion of this issue — which amounts essentially to a determination of
what facts are necessary to establish the existence of impasse — is a
matter of law, on which we sustain the Board’s determination only if
it is reasonable and consistent with the NLRA. See NLRB v. Yeshiva
Univ., 444 U.S. 672, 691 (1980); NLRB v. Peninsula Gen. Hosp. Med.
Ctr., 36 F.3d 1262, 1269 (4th Cir. 1994).
On the record before us, Grinnell points to facts that, it argues,
demonstrate the futility of further negotiations with the Union, based
on (1) the history of the parties’ negotiations, (2) Grinnell’s good-
faith bargaining before declaring the impasse, (3) the lack of move-
ment by either party on issues key to Grinnell, and (4) the indications
that the Union was unwilling to offer concessions to Grinnell signifi-
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cantly different from those to which it had committed in its new con-
tract with the NFSA. Grinnell disputes the Board’s conclusion that the
incremental wage concessions offered by the Union on April 12,
1994, demonstrated flexibility in the Union’s bargaining position.
Grinnell points out first that it did not ask for such concessions, and
second that such concessions only highlight the correctness of its
belief that it could expect no movement from the Union on its demand
for company-controlled targeting at a uniform, fixed rate. Grinnell
argues that the Union’s conduct, and the predicament it faced in bar-
gaining with Grinnell and the NFSA separately, forecast to the com-
pany that the parties would remain unable to reach agreement on the
key issues, despite the Union’s declaration of flexibility.
The Union disputes Grinnell’s assertion that the company could
reasonably have believed that the Union was unwilling to offer signif-
icant concessions beyond those contained in the NFSA agreement.
The Union points to the uncontroverted facts that it never offered the
NFSA contract to Grinnell; that it in fact offered better wage terms
to Grinnell than to the NFSA; and that it refused to grant the NFSA
a "most-favored-nation" clause in its contract. The Union also argues
that any delay in conducting negotiations and in the Union’s presenta-
tion of counterproposals was attributable to the internal turmoil within
Local 669 and that these circumstances heightened the need for fur-
ther negotiations before declaring an impasse. The Union additionally
points out that the parties had made progress in their negotiations
before Grinnell declared an impasse. As of April 12, 1994, the parties
had resolved the majority of issues in contention and had made prog-
ress on the remaining open issues. As evidence of progress in the area
of wages, the Union highlights its offer of wage concessions and its
offer to "lock in" the targeting rate on an annual basis. Further, it
points out that Grinnell’s position on targeting proved to be flexible,
as evidenced by changes in its proposals for a minimum targeting
wage rate, from 65% to 75%, and then to 80%, of the journeyman
wage rate. Finally, the Union argues that the parties’ disagreement
over whether Grinnell would have contractually conferred discretion
to target wages at a uniform, fixed rate was not a disagreement of fun-
damental principle but rather one of "simply dollars and cents," on
which movement by both sides had occurred up until the final day of
negotiations.
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Resolution of this case turns on whether an impasse can be based
on a single issue or two and whether the objectively established facts
justified Grinnell’s declaration of an impasse in this case. Even
though the determination of whether an impasse was properly
declared is an objective one, we nevertheless take the circumstances
"from the vantage point of the parties at the time they believed an
impasse was reached." AMF Bowling, 63 F.3d at 1301.
In the negotiation of a collective bargaining agreement, during
which many substantial areas important to a contract between a com-
pany and a union must be resolved, movement toward agreement —
or even full agreement — on most of the issues does not necessarily
forecast that an agreement can be reached if there is no movement by
the parties in an area of great importance to one side. Stated other-
wise, if in good faith one party insists on an important point that it
reasonably believes is essential to the overall agreement and the other
party indicates an unwillingness to compromise on that point, then
movement or agreement on other points essential to the agreement
and one party’s expressions of a willingness to keep trying will not
prevent an impasse. See AMF Bowling, 63 F.3d at 1301-02.
In this case, it was important — indeed essential — to Grinnell that
it control the targeting of wages to meet nonunion competition with-
out any Union veto and that the targeting be authorized by the collec-
tive bargaining agreement at a fixed, uniform rate. The record reveals
without any doubt that this issue was of paramount importance to
Grinnell from the beginning. Indeed, it was a driving factor in Grin-
nell’s break from the NFSA for bargaining purposes. While there was
movement and flexibility from the Union in most other areas of nego-
tiation, on this point the Union never exhibited any flexibility or pres-
ented any counterproposal that did not include a Union veto over
targeting decisions. If the position adopted and insisted upon by Grin-
nell was important and maintained in good faith, then we must con-
clude that based on the circumstances an impasse was reached,
because regardless of whether agreement could be reached on all
other issues, if this one point could not be resolved, no overall agree-
ment could be anticipated. Because the Union has not denied that
Grinnell’s position was important to it and maintained in good faith,
I readily conclude that Grinnell was entitled in the circumstances to
declare impasse because there was no prospect of movement on the
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important point of targeting. I reach this conclusion from the follow-
ing six factors contained in the record:
First, the context of the negotiations served to identify early on the
issues and their importance. The basic reason why Grinnell broke
from the NFSA to negotiate its own collective bargaining agreement
with the Union was to obtain targeting control so as to have the ability
to meet competition. Grinnell recognized that it was losing market
share to nonunion competition and believed that it was headed for a
steep decline if it could not change its basic method of conducting
business. For that reason, some six months before the March 1994
end of the collective bargaining agreement, Grinnell notified the
national trade association of which it was a member that it was with-
drawing for collective bargaining purposes, and it likewise notified
the Union of its decision, explaining why. This backdrop confirms
objectively the legitimacy and importance of positions later taken by
Grinnell during negotiations with the Union.
Second, and most important, throughout the negotiations with the
Union, Grinnell bargained in good faith, a fact found by the Board.
As we noted in AMF Bowling, 63 F.3d at 1299, it "[b]ear[s] signifi-
cantly on our analysis" that Grinnell bargained in good faith up to the
point at which it declared the parties were hopelessly deadlocked.
This finding is significant because only a genuine impasse, not a
deadlock caused by the failure of an employer to bargain in good
faith, permits the employer to take unilateral action on issues that are
the mandatory subject of collective bargaining under the NLRA. See
id.; see also Newspaper Printing Corp. v. NLRB, 625 F.2d 956, 966
(10th Cir. 1980); United Fire Proof Warehouse Co. v. NLRB, 356
F.2d 494, 497 (7th Cir. 1966). The Board’s finding of good faith addi-
tionally serves as a "powerful fact" in favor of Grinnell because it per-
mits an inference that Grinnell "made a bona fide offer to reach
agreement[,] . . . that it was honest in its negotiating positions, and
that it did not act out of any motive contrary to its stated desire to
negotiate a new contract." AMF Bowling, 63 F.3d at 1299.
Third, my conclusion that Grinnell’s declaration of impasse was
justified is supported by the length of the bargaining history, which
included several informal meetings and communications and six for-
mal negotiating sessions. Despite this bargaining history, neither party
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was able to persuade the other to move from its position on the issue
of whether Grinnell would control targeting and whether targeting
would be authorized in the collective bargaining agreement at a fixed,
uniform rate. The lack of significant movement on a central issue
through the many negotiating sessions and informal meetings tends to
demonstrate that parties are deadlocked on the issue. See Taft Broad.
Co., 163 N.L.R.B. 475, 478 (1967) (listing "the length of the negotia-
tions" as a relevant factor in the inquiry into whether parties reached
a bargaining impasse). The Union argues that the number of sessions
was insufficient to demonstrate an impasse due to the controversy
within the Union that resulted in the replacement of its chief negotia-
tor after the second formal negotiating session. But this fact is not sig-
nificant to whether Grinnell reasonably concluded that the parties
were deadlocked on the targeting issue because the substance of the
Union’s negotiating position on the targeting issue did not change
with the imposition of the trusteeship in March 1994 and the change
of Union leadership.
Fourth, neither party showed movement throughout the negotia-
tions on the essential aspects of the targeting issue — whether Grin-
nell would enjoy contractual authority unilaterally to implement
targeting through a nationwide, fixed targeting rate. While the Board
and the Union both rely on wage-rate movement by the parties
through the last formal negotiating session as evidence that further
negotiations could have led to agreement on the wage issues, this reli-
ance is misplaced because it fails to take into account the parties’
strikingly divergent positions on targeting. While the Union perhaps
believed that it could convert the targeting issue to a wage issue, this
fails to account for Grinnell’s position that control over targeting was
both basic and essential — an issue of "extreme importance" to Grin-
nell. A recounting of the record reveals this.
According to the parties’ practice from November 1991 until May
1993, Grinnell would request targeting on a project-by-project basis
from the Union, which had the final say both on whether targeting
would occur and on the targeting wage rate. Grinnell was excluded
from this program when it refused to agree to negotiate its next con-
tract through the NFSA. In January 1994, in its first contract proposal
and in a subsequent informal meeting, Grinnell conveyed to the
Union its desire to have control of targeting because it was losing
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business to nonunion competitors. Throughout the negotiations, Grin-
nell did not waiver from this position. Grinnell also consistently
insisted on a uniform, contractually fixed targeting rate while exhibit-
ing flexibility on the rate amount, moving from 65% to 75%, and
finally to 80%, of the standard journeyman wage rate.
In response to Grinnell’s request for control over targeting and for
a nationwide, fixed targeting rate, the Union never offered a counter-
proposal. At the first formal negotiating session on March 17, 1994,
it requested time to study the issue. At the second session, the Union
offered a wage proposal calling for yearly increases in journeymen’s
wages and an increase in the wage differential for foremen, but it
offered no provision for wage targeting. At the third session, the
Union again made no counterproposal. When Chatilovicz informed
Preuett that Grinnell considered targeting control, institutionalized in
the agreement at a fixed rate of the regular journeyman rate, to be one
of the important issues at stake in the negotiations, Preuett responded
that he was opposed to a uniform targeting rate because nonunion
contractors would be aware of the rate and could undercut it. At the
fourth session, the Union proposed the same wage increases it had
proposed at the second meeting and added a targeting proposal under
which, after the parties formed a new collective bargaining agree-
ment, Grinnell and Union representatives in each district would set
targeting wage rates for that district to become effective for the fol-
lowing year. But this agreement was essentially the status quo ante;
it did not give Grinnell unilateral control over targeting and Grinnell
would not be guaranteed a fixed, uniform targeting rate for the dura-
tion of the collective bargaining agreement. At the fifth negotiating
session, while Grinnell continued to insist on a fixed, across-the-
board targeting rate, the Union discussed its proposal to lower wage
rates on commercial and residential, as distinct from industrial, proj-
ects. Finally, at the sixth session, the Union proposed a wage-rate
freeze with no fixed targeting wage-rate reduction. While Grinnell
changed its proposed fixed targeting rate again, from 75% to 80%, it
continued to reject any arrangement under which the Union would be
able to withhold targeting. Throughout the negotiations, the Union
showed a determination to focus on wage rates and deny Grinnell the
contractual authority to unilaterally implement a fixed, uniform tar-
geting wage reduction. The lack of movement by either side during
the six sessions on this targeting issue is an objective factor support-
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ing Grinnell’s conclusion that the parties were unlikely to reach
agreement on that essential issue.
Fifth, the question of whether Grinnell would enjoy contractual dis-
cretion to target wages with a fixed, uniform percentage reduction
was consistently highlighted by the company as an issue of great
importance. See Taft Broad. Co., 163 N.L.R.B. at 478 (identifying
"the importance of the issue or issues as to which there is disagree-
ment" as a factor relevant to the consideration of whether bargaining
impasse existed). Grinnell’s emphasis of the issue during negotia-
tions, coupled with the lack of movement over six formal negotiating
sessions, persuasively demonstrates that the parties were unlikely to
reach agreement and that further negotiations would be futile. See
AMF Bowling, 63 F.3d at 1301-02.
Sixth, the contextual facts available to Grinnell at the time it
declared an impasse in the negotiations reasonably forecast to the
company that the Union was unwilling to make a proposal that dif-
fered significantly from the agreement it had formed with the NFSA.
See AMF Bowling, 63 F.3d at 1299 ("If the party declaring an impasse
does so in good faith and its conclusion is justified by objectively
established facts, then the duty to bargain is satisfied"); Taft Broad.
Co., 163 N.L.R.B. at 478 (identifying "the contemporaneous under-
standing of the parties as to the state of negotiations" as a factor rele-
vant to the consideration of whether bargaining impasse existed).
Because the NFSA contract did not confer control over targeting on
employers and did not establish uniform or fixed wage rates to apply
when an employer faced nonunion competition on a project, a conclu-
sion reasonably available to Grinnell was that the Union would not
agree to such terms in its contract with Grinnell. On several occa-
sions, Preuett, on behalf of the Union, emphasized to Grinnell’s repre-
sentatives the importance of uniformity within the industry. The
concessions that the Union made in the area of wages did not signifi-
cantly differ from concessions the Union made to the NFSA. The
Union proposed to Grinnell the same wage structure to which it and
the NFSA agreed, with wage concessions on commercial projects of
$1.00 in 30 states and $1.50 in 17 states. The most the Union departed
from the terms it offered to the NFSA in its contract negotiations with
Grinnell, according to Chatilovicz, amounted to the additional wage
concession of $.50 in three states, and Preuett conceded that the wage
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rates offered to Grinnell were "close" to those in the NFSA agree-
ment. Preuett’s adherence to the terms of the NFSA agreement when
making contract proposals to Grinnell, coupled with the Union’s
repeated statements that it was most interested in industry uniformity,
provided additional objective evidence from which Grinnell could
forecast that further negotiations on the targeting issue would be
futile.*
In short, I conclude that the deadlock on an important issue essen-
tial to Grinnell’s assent to an agreement justified its declaration of an
impasse on the entire agreement despite the fact that there was move-
ment on other issues on which agreement could reasonably have been
anticipated.
III
Against the background that the strike was begun over economic
issues after an impasse was reached, I next consider the issue of the
April 13, 1994 letter’s legality. On the day after the Union called its
nationwide strike against Grinnell, Grinnell wrote its April 13 letter
of explanation to its employees, a letter that the Board found violated
§ 8(a)(1) of the NLRA, 29 U.S.C. § 158(a)(1), because, contrary to
Grinnell’s belief, the Board considered the strike to be an unfair-
labor-practice strike, rather than an economic strike. It concluded that
Grinnell’s statement in the letter that it would hire permanent replace-
ments unlawfully threatened employees because, in an unfair-labor-
practice strike, striking employees cannot be permanently replaced.
Grinnell petitions for review of this ruling, arguing principally that
the strike was not an unfair-labor-practice strike but an economic one
and that its statement about hiring permanent replacements was an
accurate statement of the law.
*While not evidence of whether, at the time, an impasse was properly
declared, it is nevertheless worth noting that Grinnell attempted to pre-
sent evidence before the ALJ that the parties continued to meet on three
further occasions, after impasse was declared, to overcome the obstacle
of targeting control and were unable to do so, notwithstanding the
increased pressure exerted by the Union’s strike.
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The Union also seeks review of the Board’s findings with respect
to the April 13 letter because the Board rejected its arguments that the
letter effectively terminated striking employees in violation of
§ 8(a)(1) and (a)(3) of the NLRA, 29 U.S.C. § 158(a)(1), (3). The
Board adopted the ALJ’s conclusion that the letter did not effectively
terminate striking employees because "there was no mention of a
deadline and nothing to indicate that replacements had already been
hired or that the process of hiring replacements had begun." Cf. Noel
Food Div., 315 N.L.R.B. 905, 907-08 (1994), enforcement denied in
relevant part, 82 F.3d 1113 (D.C. Cir. 1996); American Linen Supply
Co., 297 N.L.R.B. 137, 137 (1989), enforced, 945 F.2d 1428 (8th Cir.
1991). The Union now argues that the letter "constructively" dis-
charged striking employees.
The letter, dated April 13, 1994, which was sent to all of Grinnell’s
employees, states in pertinent part:
Over the past month, we have tried to keep you informed
about our negotiations with Local 669. Although we met
with the Union on April 7, 8, and 12, the parties were unable
to reach an agreement and are now at impasse.
* * *
Because we have reached impasse in our negotiations and
feel so strongly about the changes we have proposed, we are
putting into effect the terms of our final offer, effective
Thursday, April 14, 1994.
* * *
We just learned that the Union has called a strike against
Grinnell. Although the Union has the right to strike, Grin-
nell has the right to run its business. Grinnell must do so in
order to meet its commitments to its customers and to keep
these customers from going elsewhere. We also have an
obligation to those employees who want to work.
Each of our employees has the right to work and may do
so even though a strike has been called.
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* * *
If some of our employees strike, we will hire permanent
replacements to perform our work. Permanent replacements
have the right to work even if a strike ends.
(Emphasis added).
Because I would have concluded that the parties did reach an
impasse and that the strike was an economic one, I would reverse the
findings of unfair labor practices stemming from the Board’s conclu-
sions that the parties were not at an impasse, including the Board’s
finding that the April 13 letter violated § 8(a)(1) of the NLRA. I
would also reject the Union’s position that the letter constructively
discharged the employees in violation of § 8(a)(3). See 29 U.S.C.
§ 158(a)(3) (prohibiting "discrimination in regard to hire or tenure of
employment . . . to encourage or discourage membership in any labor
organization").
We have recognized constructive discharge in violation of § 8(a)(3)
of the NLRA "[w]here an employer deliberately makes an employee’s
working conditions intolerable and therefore forces him to quit his job
because of union activities or union membership." NLRB v. CWI of
Maryland, Inc., 127 F.3d 319, 328 (4th Cir. 1997) (quoting J. P. Ste-
ven & Co. v. NLRB, 461 F.2d 490, 494 (4th Cir. 1972)). Accordingly,
Grinnell’s letter would violate § 8(a)(3) only if (1) Grinnell knew that
its implementation of its final contract offer would amount to intolera-
ble changes in working conditions and (2) it implemented the changes
and sent the letter to discourage its employees’ union activities.
I agree with the Board that the first element is lacking in this case.
There is simply no evidence that Grinnell’s implementation of its
final contract offer was intended to force its employees to quit or that
it created such intolerable working conditions as to make it foresee-
able that the employees would quit. The final contract proposal did
reduce the employees’ wages and change their benefits, but, as the
ALJ found, the resulting package was similar to that of Grinnell’s
nonunion workers. As such, I could not conclude that the implementa-
tion of the final contract proposal created intolerable working condi-
tions.
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IV
Because I would conclude that the Board erred in finding that the
negotiations between Grinnell and the Union had not reached an
impasse on April 12, 1994, I would grant Grinnell’s petition for
review and deny the Board’s cross-application for enforcement on the
impasse issue and on the unfair labor practices stemming from the
allegation that the parties had not reached an impasse. I would also
deny the Union’s cross-petition for review of the Board’s finding that
the April 13 letter did not amount to an effective discharge of employ-
ees. We grant the Board’s cross-application to enforce its order inso-
far as it finds that Grinnell bargained in good faith up to the point at
which it declared an impasse and that Grinnell did not constructively
discharge its employees.
To this extent, and for the reasons given, I respectfully dissent.
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