NLRB Advice Memoranda, CM Energy GP et al., National Labor Relations Board, (Nov 7, 2018)

These cases were submitted for advice as to: (1) whether a company that was an alleged single employer with a signatory employer violated Section 8(a)(5) by failing to follow the contractual successorship clause; (2) whether the Union was entitled to the asset purchase agreements conveying the surface mine as well as the coal preparation plant (“prep plant”) to new owners; (3) whether the subsequent operators of the prep plant and surface mine discriminated in their hiring; and, (4) whether the new owners of the surface mine and prep plant were joint employers with the subcontractors running those operations. We conclude that: (1) an alleged failure to honor a successorship clause is a contractual claim that is more properly addressed through arbitration or a Section 301 lawsuit; (2) the Union was only entitled to the asset purchase agreement covering the prep plant, not the surface mine; (3) the mechanics/welders, but not the prep plant employees, were not hired into the new operation for discriminatory reasons; and (4) it is unnecessary to decide the joint-employer questions in order to resolve or litigate the issues presented, and therefore we decline to make these determinations.

FACTS

These cases concern the sale of coal production and processing facilities at Coal Mountain, West Virginia that had been operated by subsidiaries of Bluestone Resources, Inc., a Justice family-owned company. [1] At the time of the sale, the United Mine Workers of America (the “Union”) represented two distinct bargaining units: (1) surface miners employed by Dynamic Energy, Inc. (“Dynamic”), and (2) employees of Justice Highwall Mining, Inc. (“JHM”), including mechanics/welders (who maintained the surface mining equipment), refuse truck drivers (who hauled waste), and prep plant employees (who processed the coal, and who were added to the unit in late December 2016). Each unit had its own collective-bargaining agreement, and both agreements incorporated a successorship clause from the 2016 National Bituminous Coal Wage Agreement, which prohibited the transfer or assignment of operations to any successor without securing the successor's agreement to assume the employer's contractual obligations.

Initially, the sale was structured as a single asset purchase agreement (“APA”) conveying both the surface mine and prep plant to CM Energy Facilities, LP (a subsidiary of CM Energy GP, LLC) as of December 22, 2016. However, the APA was later amended to separately convey these two parts of the Coal Mountain operations. Under the amended agreements, the surface mine was sold from Dynamic to CM Energy Holdings, LP (another subsidiary of CM Energy GP), and the buyer agreed to assume the Dynamic collective-bargaining agreement. The transfer of the surface mine was relatively seamless and most, if not all, of the surface miners were hired by the subcontractor now operating the surface mine, Cornerstone Labor Services, Inc. (“Cornerstone”). The Union continues to be the recognized representative of the surface miners.

In contrast, the prep plant was sold to CM Energy Facilities without any labor obligations, ostensibly because JHM was a mere contractor and did not own the prep plant. Rather, the plant had been owned by National Resources, Inc. (“NRI”) and Frontier Coal Company (other Bluestone/Justice companies that were not signatories to the JHM collective-bargaining agreement). Accordingly, the Union is no longer recognized as the representative of any former employees of the JHM unit, and some of those employees were not rehired into the new operations. In this regard, the new subcontractor responsible for operating the prep plant, High Voltage, Inc., hired both refuse drivers but did not hire three of the seven former employees of the prep plant. [2] The person in charge of High Voltage's hiring was a former member of the JHM unit. At the surface mine, two of the four mechanics/welders who were the former of the JHM unit were not hired by CM Energy Operations, LP (“CMEO,” another subsidiary of CM Energy GP) to maintain the surface mine equipment, assertedly because they did not present themselves for employment at the beginning of the transition, when there was an urgent need for mechanics, and because they lacked skills, training, and experience. It is evident from emails between the Cornerstone and CM Energy presidents that the surface mine operation, and possibly the entire deal, were structured to minimize the risk of unionization spreading beyond the unit of surface miners.

After the sale, the Union requested copies of the APAs covering both the prep plant and surface mine. JHM asserted confidentiality interests in the information, and after several months of back-and-forth, the Union signed a confidentiality agreement on June 2, 2017 covering, among other things, the request for the prep plant APA. [3] The Union then did not receive a response until July 27, 2017, when JHM raised, for the first time, objections as to the relevance of the prep plant APA. Thus, JHM only provided the cover page, table of contents, and signature page for the prep plant APA, notwithstanding its promise in a letter dated May 8, 2017 that the prep plant APA would be provided as soon as a confidentiality agreement was in place. Thereafter, the Union renewed its request for a complete copy of the sales agreement, but JHM never responded.

ACTION

The Region should issue complaint, absent settlement, alleging that JHM refused to provide the complete APA covering the prep plant, as well as that CMEO discriminated in its hiring with respect to the mechanics/welders who most recently served as in the JHM unit. The remaining allegations lack merit and should be dismissed, absent withdrawal.

I. The claim that NRI failed to follow the successorship clause as a single employer with JHM is a contractual dispute more appropriately addressed in arbitration or a Section 301 action

It is well established that a mere breach of contract is not an unfair labor practice. [4] Rather, parties must enforce their contractual rights through other avenues, namely arbitration or a Section 301 action, [5] unless a contract breach constitutes a significant mid-term modification of employee terms and conditions of employment or constitutes a wholesale repudiation of the contract. [6] Such actions are “situated at the threshold of matters going to the heart of the collective-bargaining relationship and to the [employer's] duty to bargain.” [7]

Recourse for an employer's breach of a successorship clause should not be through the Board's processes but through arbitration and/or a Section 301 action. [8] cases finding that a failure to abide by a successor clause constituted a Section 8(a)(5) violation. To the contrary, such charges have been dismissed in the past. [9] The fact that the breach was committed by NRI, an alleged single employer with JHM, rather than by the signatory employer does not render Board proceedings necessary or appropriate; single employer questions can also be resolved through the arbitral process or Section 301 actions, so a union is not left without recourse in these types of circumstances. [10] Thus, we conclude that the Region should dismiss, absent withdrawal, the allegation concerning NRI's failure to abide by the successorship clause covering the JHM unit.

II. JHM unlawfully withheld the prep plant APA, but there is insufficient evidence that the surface mine APA was likewise relevant

A collective-bargaining representative is entitled to information relevant and necessary to carrying out its statutory duties and responsibilities, including negotiating over mandatory bargaining subjects and policing a collective-bargaining agreement. [11] When the requested information deals with the terms and conditions of employment of bargaining unit employees, the Board will deem the information presumptively relevant and necessary to the union's performance of its statutory duties. [12] Where information is not presumptively relevant, the burden is on the party requesting the information to demonstrate its relevance, i.e. by showing a reasonable belief, supported by objective evidence, that the information is relevant. [13] To meet that burden, the General Counsel must present evidence that: (1) the party requesting the information demonstrated the relevance of the non-presumptively relevant information, or (2) the relevance of the information “should have been apparent” to the respondent under the circumstances. [14]

Requests for a sales agreement, as well as information about a possible single employer relationship, fall into the category of non-presumptively relevant information. [15] With respect to single-employer information, the union must have a “‘reasonable belief that enough facts existed to give rise to a reasonable belief that the two companies were in legal contemplation a single employer.’” [16]

We conclude that the Union was entitled to the prep plant APA in connection with its grievance concerning noncompliance with the successorship clause in the JHM collective-bargaining agreement. [17] The Union reasonably believed that the successorship clause had not been followed, and that NRI was a single employer with JHM based on NRI's and JHM's common ownership, overlapping officers, and shared address. [18] The relevance of the prep plant APA to the Union's ability to pursue its grievance alleging a breach of the successorship clause should have been apparent to JHM's officials, given that they were intimately involved in all of the Justice family's corporate entities at Coal Mountain and the Union had already raised the single employer argument in other respects during the course of the parties' extensive correspondence over the information requests. Although JHM contested the relevance of the prep plant APA, its objection was not raised in a timely manner. Thus, it waited months before raising it, and it misled the Union into thinking that the confidentiality issue was the only obstacle to receipt of the requested information by promising in May 2017 to provide documents pertaining to the sale of the prep plant once a confidentiality agreement was in place. In these circumstances, we do not fault the Union for failing to further engage in an interactive process with JHM concerning the information request. Finally, even assuming JHM had a legitimate confidentiality interest in the document, the Union alleviated those concerns by signing a non-disclosure agreement. Thus, JHM's provision of bare bones excerpts from the prep plant APA was clearly insufficient in these circumstances. [19]

We conclude, however, that the relevance of the surface mine APA has not been established. Shortly after the deal closed, the Union was informed that Cornerstone had assumed the Dynamic collective-bargaining agreement. Absent evidence undercutting that claim, of which there is none, there was no basis for the Union to have believed that Dynamic had failed to honor the successorship clause. Indeed, Dynamic supplied the Union with excerpts of the APA showing that the buyer had assumed the Dynamic collective-bargaining agreement. Furthermore, the Union asserts that it needed the Dynamic APA to determine whether Dynamic failed to protect the interests of JHM employees, as a single employer with JHM, in derogation of the successorship clause contained in the JHM contract. However, there can be no colorable claim that the JHM collective-bargaining agreement would apply to Dynamic given that the Union had long acquiesced to separate units. [20] Finally, the Union asserts that the surface mine APA was relevant for purposes of effects bargaining, but it has not articulated any particular information it sought from the APA in order to prepare for such bargaining. Thus, this assertion is too general and conclusory a basis to establish relevance. [21] Accordingly, the Region should only issue complaint, absent settlement, as to the allegation that JHM unlawfully withheld the prep plant APA.

III. The discriminatory hiring allegations are meritorious as to the mechanics/welders, but not the prep plant employees

A successor employer violates Section 8(a)(3) by refusing to hire the predecessor's employees to avoid incurring a successor bargaining obligation or because of their known or suspected union sympathies. [22] The following factors are among those that would establish such a violation:

[1] substantial evidence of union animus; [2] a lack of a convincing rationale for refusal to hire the predecessor's employees; [3] inconsistent hiring practices or overt acts or conduct evidencing a discriminatory motive; and [4] evidence supporting a reasonable inference that the new owner conducted its staffing in a manner precluding the predecessor's employees from being hired as a majority of the new owner's overall work force to avoid the Board's successorship doctrine. [23]

Once the employer's anti-union motive is established, “the burden then shifts to the employer to prove that it would not have hired the predecessor's employees even in the absence of its unlawful motive.” [24] In establishing a defense, an employer may show that “it did not hire particular employees because they were not qualified for the available jobs,” or it did not have as many unit jobs as there were unit employees of the predecessor. [25]

Here, we agree with the Region that CMEO's refusal to hire the mechanics/welders who served as under JHM was discriminatorily motivated. Anti-union animus is established based on communications between CMEO and Cornerstone disclosing an intent to structure operations to minimize the risk of unionization spreading beyond the surface miners themselves. Discriminatory motive can also be inferred based on: (1) disparate treatment in terms of initiating contact with at least one predecessor employee who was less active in the Union, [26] thereby undercutting the claim that the were not hired because they failed to present themselves for employment; [27] (2) CMEO's shifting position as to whether any CM Energy entity employed any mechanics/welders at Coal Mountain; [28] and (3) the unconvincing claim that the were not hired due to a lack of skills, training and experience, given that both had worked for JHM since [29] CMEO did not solicit their qualifications but relied on general knowledge from industry experience, one of the discriminatees in fact held a number of training certificates, and CMEO failed to produce evidence supporting its assertion that the two predecessor employees it did hire had graduated from a certified technical school. In addition, we would infer knowledge of the discriminatees' Union activity based on the email on January 27, 2017 between Cornerstone and CMEO concerning payroll employees working at the site who were not on the list of Dynamic employees. In that email, the Cornerstone asked whether these additional employees were active Union employees. Furthermore, circumstantial evidence of knowledge can be established based on CMEO's ongoing communications with predecessor managers who were aware of the discriminatees' Union status. Since CMEO's asserted reasons for not hiring these employees were pretextual, it cannot meet its defense burden under Wright Line. [30] Accordingly, CMEO [31] violated Section 8(a)(3) by refusing to hire the [32]

As to the prep plant employees, we conclude that there is insufficient evidence demonstrating that the new subcontractor, High Voltage, conducted its hiring in a discriminatory manner. The person in charge of hiring was a former member of the JHM unit and there is no evidence suggesting that harbored animus toward the Union. Furthermore, we would not impute animus from CM Energy Facilities to High Voltage given the limited evidence of a joint employer relationship. Further undercutting an inference of animus is the fact that the predecessor employees would not have apparently comprised a majority of the High Voltage workforce in any event. Thus, High Voltage added a second shift of workers to the prep plant for nondiscriminatory reasons, significantly increasing the denominator in any potentially residual unit of prep plant workers bifurcated from the mechanics/welders. Furthermore, there is only one predecessor employee that High Voltage allegedly refused to hire for discriminatory reasons, [33] and hiring would not have changed the successorship equation given that High Voltage had added a second shift. For these reasons, the Region should dismiss, absent withdrawal, the allegation concerning the discriminatory refusal to hire predecessor employees at the prep plant.

Accordingly, the Region should issue complaint, absent settlement, alleging that JHM violated Section 8(a)(5) by failing to provide the prep plant APA, and that CMEO violated Section 8(a)(3) by discriminating against two Union in its hiring.

/s/

J.L.S.

ADV.06-CA-198911.Response.Bluestone, CMEnergy.