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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 15, 2003 Decided November 4, 2003
Nos. 02-1260
& 02-1302
L AKELAND BUS LINES, INC.,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board
Richard J. Delello argued the cause and filed the briefs for
petitioner. Alan I. Model entered an appearance.
David A. Fleischer, Senior Attorney, argued the cause for
respondent. With him on the brief were Arthur F. Rosen-
feld, General Counsel, John H. Ferguson, Associate General
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
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Counsel, Aileen A. Armstrong, Deputy Associate General
Counsel, and Charles P. Donnelly, Supervisory Attorney.
Before: E DWARDS, RANDOLPH , and GARLAND , Circuit Judges.
Opinion for the Court filed by Circuit Judge EDWARDS .
EDWARDS, Circuit Judge: Petitioner Lakeland Bus Lines,
Inc. (‘‘Lakeland’’ or ‘‘the Company’’) is a private bus company
whose drivers are represented by the Amalgamated Transit
Union, Local 1614, AFL-CIO (‘‘the Union’’). In late 1996,
Lakeland and the Union entered into negotiations over a new
collective bargaining contract. The parties’ existing agree-
ment expired on January 31, 1997. In February 1997, when
negotiations failed to produce a new agreement, the Company
gave a final offer to the Union. On the same day, Lakeland’s
President sent a letter to bargaining unit employees detailing
the Company’s bargaining position and financial difficulties.
Shortly thereafter, the Union requested that the Company
provide financial information to verify that it could not afford
any contract terms that exceeded the costs of its final offer.
Company representatives refused to furnish any of the re-
quested information, clarifying that Lakeland had never
based its bargaining position on an inability to pay. Lake-
land’s employees subsequently rejected the Company’s final
offer. Lakeland then unilaterally implemented the terms of
its final offer.
The Union filed unfair labor practice (‘‘ULP’’) charges
against the Company with the National Labor Relations
Board (‘‘NLRB’’ or ‘‘the Board’’) in March 1997, claiming that
Lakeland had failed to bargain in good faith in violation of the
National Labor Relations Act (‘‘NLRA’’ or ‘‘the Act’’). Fol-
lowing issuance of a complaint, the matter was heard by an
Administrative Law Judge (‘‘ALJ’’). The ALJ dismissed the
complaint, finding that Lakeland had never asserted an ina-
bility to pay. The Board reversed the ALJ’s decision. Al-
though it largely agreed with the ALJ’s findings of fact, the
Board concluded that the letter from Lakeland’s President
implicitly asserted an inability to pay that the Company never
effectively retracted. The Board therefore concluded that
Lakeland had engaged in unfair labor practices by refusing to
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furnish the requested information and by unilaterally imple-
menting its final offer in the absence of a valid impasse.
Lakeland petitioned this court for review, arguing that the
Board’s conclusions are not supported by substantial evidence
on the record as a whole. The Board filed a cross-application
for enforcement.
The Board’s decision is not supported by substantial evi-
dence. Viewing the record as a whole, it cannot be found that
Lakeland asserted an inability to pay. It is absolutely clear
in the record that any statements from the Company that
arguably implied an inability to pay were unequivocally clari-
fied and that the Union understood the clarification. We
therefore hold that the Board erred in concluding that Lake-
land committed ULPs in refusing to furnish the disputed
information and in unilaterally implementing its final offer.
Accordingly, we grant Lakeland’s petition for review and
deny the Board’s cross-application for enforcement.
I. BACKGROUND
The Board found that the relevant facts are not in dispute.
See Lakeland Bus Lines, Inc., 335 N.L.R.B. 322, 322 (2001)
(‘‘Order’’). We will briefly summarize the facts before turn-
ing to the issues presented by the petition for review.
Petitioner Lakeland operates a commuter bus service be-
tween western New Jersey and New York City. The Compa-
ny has had a collective-bargaining relationship with the Union
for more than 20 years. With a collective bargaining agree-
ment set to expire in January 1997, Lakeland and the Union
commenced negotiations for a new agreement in November
1996. The parties held 11 bargaining sessions. Lakeland’s
bargaining position during these negotiations was heavily
influenced by the recent institution of a commuter rail service
by the State of New Jersey that overlapped some of the
routes operated by Lakeland. As a consequence of this new
competition, Lakeland faced significant losses in ridership and
revenue.
In light of these claimed losses, the Company requested
several concessions from the Union in the new contract.
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Negotiations focused in particular on Lakeland’s request for
an extended wage freeze and for a modification of the Compa-
ny’s rules regarding ‘‘spread time,’’ which determined the
availability of overtime pay for bus drivers. Lakeland re-
peatedly stated that it needed these concessions because of
the revenue losses it had incurred as a result of the new rail
service. On February 21, 1997, the parties met for what
proved to be their final bargaining session. Lakeland pro-
posed a one-time payment of $500 per employee in exchange
for the Union’s acceptance of its proposals. The Union would
not agree to the modification of the spread time rules and the
parties failed to reach an agreement.
On February 25, 1997, Lakeland submitted its final offer to
the Union. The offer included the wage freeze, the new
spread time rules, and the $500 bonus payment. In addition,
the president of the Company sent a letter to bargaining unit
employees urging their acceptance of the final offer. The
letter stated in relevant part:
[A]s you know, we have lost 7500 riders per week to
New Jersey Transit Rail. However, we are at-
tempting to do it with minimal impact on each of the
members of our family, i.e., YOU.
TTTT
[As] those of you who have been around for a
while know, I am not one to ‘‘cry wolf.’’ I believe in
being honest, and that is just what I am trying to do.
Simply stated, we are trying to bring the bottom line
back into the black and we are doing this by increas-
ing charters, reducing liability insurance costs and
negotiating with NJT for additional lines to utilize
our manpower and equipment.
We are simply all doing what must be done, and
now, we are asking for help from our LAKELAND
FAMILY so we may retain your jobs and get back
in the black in the short term and continue to share
our good fortune as we have in the past.
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Therefore, I ask you to give the enclosed Final
Offer your serious consideration and vote YES to
ratify it. The future of Lakeland depends on it.
Letter from Lakeland President to Lakeland Employees
(Feb. 25, 1997), quoted in Order, 335 N.L.R.B. at 322 (altera-
tions in original). The next day, Union attorney John Craner
wrote a letter to Lakeland attorney Desmond Massey ex-
pressing confusion over the Company’s position and request-
ing that the Company verify its claims by providing financial
information to the Union. The letter stated:
The Union is having a great deal of difficulty in
understanding the position of the company. On the
one hand it talks about its financial woes and looks
for all types of give-backs and at the same time
offers the employees a $500 bonus amounting to
approximately $40,000. To the Union, none of this
makes sense. And, the reason it doesn’t make sense
is because the Union has been accepting the repre-
sentations of the Company as to the extent of the
losses it claims are due to the loss of passengers as a
result of the rail line which now competes with
Lakeland on its 24 lines.
Accordingly, since the [spread time issue] seems
so critical and the company contends it is sustaining
substantial losses, the Union now feels it is impera-
tive to ascertain the extent of this loss, if any and
wants to have its accountant inspect the company
books and records before any further negotiations
take place or any ‘‘final offers’’ are put on the table.
Letter from Craner to Massey (Feb. 26, 1997), quoted in
Order, 335 N.L.R.B. at 334. In response, Massey denied that
the Company had any obligation to disclose the requested
financial information. And, in an effort ‘‘[t]o set the record
straight,’’ Massey made it expressly clear
that the Company was losing money, not that the
company’s financial condition precluded it from
agreeing to the Union wage proposal. No claim of
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financial inability, explicit or implicit, was made by
myself or any company official.
Letter from Massey to Craner (Mar. 11, 1997), quoted in
Order, 335 N.L.R.B. at 334. Craner and Massey subsequent-
ly exchanged another set of letters to similar effect. Massey
again reiterated that ‘‘[a]t no time did I or any Company
official claim a present inability to pay or a prospective
inability to pay during the life of the contract being negotiat-
ed.’’ Letter from Massey to Craner (Mar. 27, 1997), quoted
in Order, 335 N.L.R.B. at 335.
On March 28, 1997, following the employees’ rejection of
the Company’s final offer, Lakeland unilaterally implemented
the terms of its final offer. This included the modification of
the spread time rules and the $500 per employee payment.
See Order, 335 N.L.R.B. at 335. In October 1997, the bar-
gaining unit employees went on strike. During the strike,
the Union distributed a leaflet to customers apologizing for
any inconvenience associated with the work stoppage. The
Union’s leaflet also stated that,
[w]hen [the Union] requested an audit of their
books, Lakeland refused, admitting that they were
not, in fact, under any hardship from a loss of
revenue, but instead, chose not to offer any increas-
es in wages.
See Union Leaflet to Customers (Oct. 28, 1997), quoted in
Order, 335 N.L.R.B. at 335.
The Union filed charges with the Board on March 27, 1997,
contending that Lakeland had violated the NLRA by refusing
to supply the requested financial information and by failing to
bargain in good faith. On May 26, 1998, NLRB General
Counsel issued a complaint. The General Counsel charged
Lakeland with violating § 8(a)(1) and (5) of the Act by
refusing to disclose its financial information or to bargain in
good faith. The General Counsel also charged that this
refusal had precluded the parties from reaching a valid
impasse in negotiations, so that Lakeland’s unilateral imple-
mentation of its final offer also violated the Act.
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In proceedings before the ALJ, the General Counsel con-
ceded that Lakeland had never expressly claimed an inability
to pay. Rather, the General Counsel argued that the Compa-
ny’s statements during the course of bargaining amounted to
an implicit claim. See Order, 335 N.L.R.B. at 332. The
General Counsel further conceded – and the Board does not
dispute – that ‘‘but for the alleged refusal to furnish informa-
tion, a valid impasse was reached and therefore the Company
would have been within its rights in implementing its last
offer.’’ See id.
The ALJ dismissed the complaint. In the ALJ’s view,
Lakeland’s disputed assertions during bargaining related
solely to loss of revenue and ridership, not an inability to pay.
The ALJ held that such assertions did not trigger any duty to
disclose the requested financial information. The ALJ fur-
ther found that even if Lakeland had implicitly asserted an
inability to pay, Massey’s exchange of letters with Craner
retracted the claim and discharged any obligation the Compa-
ny may have incurred. See id. at 338.
The Board rejected the ALJ’s conclusions and found that
Lakeland had violated the Act by failing to produce the
financial information. The Board relied almost exclusively
upon the February 25 letter from the Company’s President to
bargaining unit employees urging the adoption of the final
offer. In particular, the Board found that the President’s
statements that the Company was ‘‘trying to bring the bottom
line back into the black,’’ that acceptance of the final offer
would enable the Company to ‘‘retain [employee] jobs and get
back in the black in the short term,’’ and that the ‘‘future of
Lakeland depends on’’ acceptance of the final offer conveyed
an inability to pay. Id. at 324-25. The Board further con-
cluded that Lakeland had not effectively retracted this claim.
Massey’s statements, the Board reasoned, constituted a deni-
al that the Company was claiming an inability to pay. Ac-
cording to the Board, an effective retraction would first
require acknowledgment of the claim to be retracted. Conse-
quently, a denial logically could not accomplish a retraction.
See id. at 326. Accordingly, the Board found that Lakeland
had unlawfully refused to furnish its financial information.
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8
This refusal to bargain prevented the parties from reaching a
valid impasse. Absent a valid impasse, Lakeland’s unilateral
implementation of its final offer also violated the Act. See id.
Lakeland filed this petition for review, and the Board cross-
petitioned for enforcement of its decision.
II. ANALYSIS
Sections 8(a)(5) and 8(d) of the NLRA make it an unfair
labor practice for an employer to refuse to bargain collective-
ly and in good faith with the representatives of its employees.
See 29 U.S.C. § 158(a)(5), (d) (1998). This obligation to bar-
gain in good faith requires that employers and unions ex-
change relevant information when necessary to substantiate
assertions made during collective bargaining. See NLRB v.
Truitt Mfg. Co., 351 U.S. 149, 152-53 (1956). In Truitt, the
Supreme Court held that when an employer bases its bar-
gaining position on an asserted inability to pay, information
about the employer’s finances becomes relevant to the negoti-
ations. See id. In this situation, a union may be entitled to
examine the company’s books in order to verify the claim.
See id. at 153. A company that asserts an inability to pay
and then refuses to furnish substantiating financial informa-
tion upon request from a union fails to bargain in good faith.
See id.; see also ConAgra, Inc. v. NLRB, 117 F.3d 1435,
1438-39 (D.C. Cir. 1997). Truitt emphasized, however, that it
does not automatically follow that a union is entitled to
substantiating evidence in every case in which economic
inability is raised as an argument against increased wages.
Truitt, 351 U.S. at 153. Rather, ‘‘[e]ach case must turn upon
its particular facts.’’ Id.
In ConAgra, we recognized that the Board’s application of
Truitt’s mandate has been evolving. 117 F.3d at 1439-42.
Prior to 1991, the Board construed Truitt to oblige an em-
ployer to provide financial information to a union upon re-
quest even when the employer asserted only a ‘‘competitive
disadvantage.’’ Id. at 1439. In Nielsen Lithographing Co.,
the Board changed its course and ruled that a claim of
competitive disadvantage is not the same as a claim of
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9
financial inability to pay. 305 N.L.R.B. 697, 699 (1991), aff’d
sub nom. Graphic Communications Int’l Union v. NLRB,
977 F.2d 1168 (7th Cir. 1992). Subsequent decisions, both
from the Board and this court, have emphasized a distinction
between asserting an inability to pay, which triggers the duty
to disclose, and asserting a mere unwillingness to pay, which
does not. See, e.g., United Steelworkers v. NLRB, 983 F.2d
240, 244 (D.C. Cir. 1993); Beverly Cal. Corp., 310 N.L.R.B.
222, 226-27 (1993), enforced in part, Torrington Extend-A-
Care Employee Ass’n v. NLRB, 17 F.3d 580 (2d Cir. 1994).
Even where an employer’s statements suggest an inability
to pay, no duty to disclose arises if that employer clarifies
that it did not intend to plead financial inability. See Fairha-
ven Props., Inc., 314 N.L.R.B. 763, 769 (1994). This rule
cogently reflects the rationale underlying the Truitt obli-
gation to disclose financial information. A refusal to disclose,
the Supreme Court noted, could amount to a failure to
bargain in good faith where ‘‘an employer mechanically re-
peats a claim of inability to pay without making the slightest
effort to substantiate the claim.’’ Truitt, 351 U.S. at 153. In
this same vein, the Board has made it clear that a mere
disclaimer of an asserted inability to pay is not dispositive.
Shell Co., 313 N.L.R.B. 133, 134 n.7 (1993). However, if an
employer obliquely, unintentionally, or momentarily implies
an inability to pay, the failure to substantiate this claim is not
bad faith where the balance of the employer’s representations
disavow any such claim. Cf. Truitt, 351 U.S. at 153-54 (‘‘The
inquiry must always be whether or not under the circum-
stances of the particular case the statutory obligation to
bargain in good faith has been met.’’).
In this case, the Board determined that certain phrases in
the employer’s February 25 letter to bargaining unit employ-
ees implied that the concessions the Company demanded
from the Union were necessitated by the Company’s inability
to pay. The Board further concluded that Lakeland never
effectively retracted this claim. In its petition for review to
this court, Lakeland’s principal claim is that the Board’s
decision is not supported by substantial evidence. We will
now turn to this claim.
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‘‘A reviewing court sets aside decisions of the Board only
when the Board has acted arbitrarily or otherwise erred in
applying established law to the facts, or when its findings of
fact are not supported by ‘substantial evidence’ in the record
considered as a whole.’’ ConAgra, 117 F.3d at 1438. Normal-
ly, we will reverse a Board decision for lack of substantial
evidence ‘‘only when the record is ‘so compelling that no
reasonable factfinder could fail to find’ to the contrary.’’
United Steelworkers, 983 F.2d at 244 (quoting INS v. Elias-
Zacarias, 502 U.S. 478, 484 (1992)). As the Supreme Court
has explained, however, ‘‘[t]he substantiality of evidence must
take into account whatever in the record fairly detracts from
its weight.’’ Universal Camera Corp. v. NLRB, 340 U.S. 474,
488 (1951). Accordingly, we may not find substantial evi-
dence ‘‘merely on the basis of evidence which in and of itself
justified [the Board’s decision], without taking into account
contradictory evidence or evidence from which conflicting
inferences could be drawn.’’ Id. at 487.
Applying these principles, it is clear that the Board’s
decision in this case fails to take account of contradictory
evidence and is not supported on the record as a whole. The
Board based its decision on three statements in the employ-
er’s February 25 letter. In that letter, Lakeland’s President
‘‘stated that [the Company] was ‘trying to bring the bottom
line back into the black,’ that acceptance of the final offer
would enable [Lakeland] to ‘retain your jobs and get back in
the black in the short term,’ and that ‘[t]he future of Lake-
land depends on it.’ ’’ Order, 335 N.L.R.B. at 324-25. Analo-
gizing to a previous holding that statements that a company’s
business condition was ‘‘bad’’ and ‘‘a matter of survival’’
implicitly asserted an inability to pay, the Board concluded
that Lakeland’s statements ‘‘reasonably conveyed a present
inability to pay.’’ Id. at 325 (citing Shell Co., 313 N.L.R.B.
133 (1993)).
It is debatable whether these three statements, viewed in
isolation, imply an inability to pay, as opposed to a mere
unwillingness to pay. When considered in light of the record
as a whole, however, it is absolutely clear that the statements
do not provide a sufficient basis for the Board’s decision.
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The Board purports to consider the letter ‘‘in context.’’ Or-
der, 335 N.L.R.B. at 325, 326. Indeed, its own precedents
require that it do so. See, e.g., Burruss Transfer, Inc., 307
N.L.R.B. 226, 228 (1992) (holding that an employer’s state-
ment that he did not ‘‘feel that he could afford’’ the union’s
proposals did not trigger a duty to disclose because ‘‘the
overall context of bargaining’’ did not suggest an inability to
pay). Nevertheless, the Board decision focuses principally on
the February 25 letter to support its conclusion.
The Board also references Lakeland’s ‘‘repeated assertions
during negotiations about its loss of ridership and revenue.’’
Order, 335 N.L.R.B. at 326. But these assertions involve
nothing more than claims of short-term business losses. The
Board and courts have distinguished between claims of busi-
ness losses and competitive disadvantage versus claims that
the employer cannot pay. See, e.g., ConAgra, 117 F.3d at
1443; Beverly Cal. Corp., 310 N.L.R.B. at 227. As the Board
noted in Nielsen:
The employer who claims a present inability to pay,
or a prospective inability to pay during the life of the
contract being negotiated, is claiming essentially
that it cannot pay. By contrast, the employer who
claims only economic difficulties or business losses
or the prospect of layoffs is simply saying that it
does not want to pay.
Nielsen, 305 N.L.R.B. at 700. Thus, the case law makes it
clear that claims regarding business losses are not equivalent
to claims of inability to pay and they alone do not trigger the
Truitt obligation to substantiate an asserted inability to pay.
See, e.g., Stroehmann Bakeries, Inc. v. NLRB, 95 F.3d 218,
222 (2d Cir. 1996) (‘‘[W]here an employer claims only general
economic difficulties or business losses as the reason for its
position, the employer may lawfully refuse to hand over
financial information.’’).
The Board’s only other reference to ‘‘context’’ relates to
statements that Lakeland failed to make regarding its contin-
ued profitability. See Order, 335 N.L.R.B. at 325-26. Obvi-
ously, if a company asserts that it is profitable, this may serve
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to negate any suggestion that the company has asserted an
inability to pay. See ConAgra, 117 F.3d at 1443. Therefore,
it is hardly surprising that the Board has found assertions of
profitability relevant in cases of this sort. See Nielsen, 305
N.L.R.B. at 700-01. However, the Board has never held that
the absence of evidence on profitability is determinative.
In this case, during collective bargaining negotiations, the
Company claimed only short-term business losses, not an
inability to pay. Then, in the February 25 letter, an issue
arose as to whether the Company had asserted an inability to
pay by stating that it needed to get ‘‘back in the black in the
short term.’’ But the Company quickly defused any confu-
sion over this matter by explicitly disclaiming any intention to
assert an inability to pay. In this context, the Company’s
failure to positively assert that it was profitable cannot be
determinative.
Rather than the clipped view of the record it chose to take,
the Board should have fully considered the entire course of
negotiations in determining whether the Company was truly
pleading an inability to pay. For example, when the Union
initially requested that the Company turn over its books,
Lakeland’s attorney responded: ‘‘[T]o set the record straight,
I advised that the Company was losing money, not that the
company’s financial condition precluded it from agreeing to
the Union wage proposal. No claim of financial inability,
explicit or implicit, was made by myself or any company
official.’’ Letter from Massey to Craner (Mar. 11, 1997),
quoted in Order, 335 N.L.R.B. at 334. And when the Union
persisted in requesting the information, Lakeland’s attorney
again wrote that ‘‘[a]t no time did I or any Company official
claim a present inability to pay or a prospective inability to
pay during the life of the contract being negotiated.’’ Letter
from Massey to Craner (Mar. 27, 1997), quoted in Order, 335
N.L.R.B. at 335.
In view of these clarifying statements, the Board could not
plausibly conclude that Lakeland asserted an inability to pay.
See Georgia-Pacific Corp., 305 N.L.R.B. 112, 116 (1991) (hold-
ing that a subsequent letter made it ‘‘clear that Respondent
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13
[was] not pleading poverty or an inability to retain the
contractual ‘status quo,’ simply an unwillingness to continue
to pay fringe benefits or wages that would make competition
more difficult’’). Indeed, the Union understood as much. In
the leaflet distributed to Lakeland customers during the
October 1997 strike, the Union related details of the bargain-
ing process and the Union’s request for financial information.
In the Union’s view, after Lakeland refused to disclose the
requested material, the Company ‘‘admitt[ed] that they were
not, in fact, under any hardship from a loss of revenue, but
instead, chose not to offer any increases in wages.’’ Union
Leaflet to Customers (Oct. 28, 1997), quoted in Order, 335
N.L.R.B. at 335 (emphasis added). Despite the inferences
the Board attempts to extract from the February 25 letter,
the record as a whole shows that Lakeland simply did not
rest its bargaining position on an inability to pay. According-
ly, no Truitt obligation to disclose financial information arose.
In its decision, the Board opted to split its inquiry into two
steps, asking first whether it could discern any statements
from the employer that triggered a duty to disclose. Having
concluded that the February 25 letter, coupled with repeated
claims during negotiations about loss of ridership and reve-
nue, asserted an inability to pay, the Board then considered
whether any subsequent statement from the employer ade-
quately retracted the initial claim such that the obligation to
produce financial information was discharged. A similar ap-
proach was followed in Fairhaven Properties. See 314
N.L.R.B. at 769. Even adopting this approach, the Board’s
decision is not supported by substantial evidence. As noted
above, in the exchange of letters between Company and
Union counsel, Lakeland repeatedly stated that at no time
had it claimed an inability to pay. These statements indisput-
ably disavowed any contrary impression Lakeland’s state-
ments during bargaining and in the February 25 letter might
have left regarding the Company’s position. The Board ruled
otherwise, reasoning that, by definition, one could not ‘‘re-
tract’’ a statement without first acknowledging having made
it. The letters from Lakeland’s attorney denied making the
assertion and therefore, in the Board’s view, logically could
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not have constituted a retraction. See Order, 335 N.L.R.B. at
326. This argument is unavailing. Lakeland responded pre-
cisely to the Union’s request for financial information by
making it unmistakably clear that it did not rely on an
inability to pay to justify its bargaining position. There is
nothing in the Board’s order or the ALJ’s findings to suggest
that these disavowals were made disingenuously or in bad
faith. Cf. Shell Co., 313 N.L.R.B. at 134 n.7, 138 (finding that
an express retraction was not dispositive where the company
‘‘was playing semantical games’’). The record therefore does
not support the Board’s conclusion.
Because Lakeland did not assert an inability to pay, it
incurred no obligation to disclose the requested financial
information. Its refusal to do so therefore did not constitute
a refusal to bargain. The finding that the parties had other-
wise reached an impasse thus stands unrefuted. See Order,
335 N.L.R.B. at 332. The Company therefore did not violate
the Act by unilaterally implementing the terms of its final
offer. See Am. Fed’n of Television & Radio Artists v.
NLRB, 395 F.2d 622, 624 (D.C. Cir. 1968).
III. CONCLUSION
We grant the Company’s petition for review and deny the
Board’s cross-application for enforcement.
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