NLRB Cases Archive 1960 - 1995, LABOR-RELATIONS 1993-94 CCH-NLRB ¶15,518, TIMES HERALD PRINTING COMPANY dba DALLAS TIMES HERALD and DALLAS MAILERS UNION NO. 20 aw COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO and DALLAS TYPOGRAPHICAL UNION NO. 173 aw COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO., (Nov. 30, 1994), National Labor Relations Board, (Nov 30, 1994)

TIMES HERALD PRINTING COMPANY dba DALLAS TIMES HERALD and DALLAS MAILERS UNION NO. 20 aw COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO and DALLAS TYPOGRAPHICAL UNION NO. 173 aw COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO.

315 NLRB No. 100.Case Nos. 16-CA-15433 and -15433-2. November 30, 1994 James M. Kennedy, Administrative Law Judge..

Before Gould, Stephens, Devaney, Browning and Cohen.

J.O. Dodson, for General Counsel. Billy J. Austin, Englewood, Colorado, for Charging Parties.

Remedial Orders--Reimbursements--WARN Payments as Backpay Offset.--Although an employer made payments to its employees as required under the Worker Adjustment and Training Notification Act, such payments did not constitute an offset of the employer’s backpay obligations to employees after it unlawfully refused to bargain over its plant closing. Both WARN payments and backpay payments were necessary in order to maintain the status quo for the employees. The policy of the NLRB is that the employees were to be made whole for the losses they incurred as the result of the employer’s breach of its bargaining duty, including significant losses due to the employer’s unlawful failure to engage in effects bargaining. Section 10(c).

Back reference: ¶5330.751.

From Text of Board’s Decision

The single issue presented in this case concerns the appropriate remedy for the Respondent’s violation of its duty to bargain over the effects of its decision to close its business and terminate its employees. Specifically, we must decide whether the judge properly found that the payments the Respondent made to employees pursuant to the Worker Adjustment and Retraining Notification Act of 1988 (WARN), 29 U.S.C. §2101 et seq., are an offset to the limited backpay remedy the Board traditionally provides for violations of this kind pursuant to Transmarine Navigation Corp., [1968-1 CCH NLRB ¶22,250] 170 NLRB 389 (1968). For the reasons set forth below, we find, contrary to the judge, that payments required by WARN may not be credited against payments required by the National Labor Relations Act. [1]

I. FACTUAL BACKGROUND

For many years, the Respondent has had a collective-bargaining relationship with Dallas Typographical Union No. 173, the representative of the Respondent’s composing room employees, and with Dallas Mailers Union No. 20, the representative of the Respondent’s mailroom employees. The most recent collective-bargaining agreements between the Respondent and the Unions expired on August 31 and September 11, 1990. The Respondent began negotiations with each Union prior to the expiration of the collective-bargaining agreements, and the negotiations continued into December 1991. [2] During this period of negotiations, rumors that the Respondent was considering closing its operations appeared in newspaper articles and elsewhere. The Respondent repeatedly denied the rumors to the Unions.

On December 9 the Unions received letters from the Respondent stating the following:

In compliance with the Federal Worker Adjustment and Retraining Notification Act (“WARN”) ... this is to notify you that on December 9, 1991, The Times Herald Printing Company (“Newspaper”) ... effective this date, has permanently ceased operations.

...

As a result of the decision to sell substantially all of the assets of the Newspaper and to go out of business permanently, employment of all employees represented by your union is terminated as of today.

...

Although not required by WARN, the Newspaper will provide the employees whose names appear on the attached list 60 days pay and benefits ... If you wish to meet and bargain about the effects of this decision on the employees represented by your Union, please contact Mary Trossen.

On December 10 the Unions requested to meet and bargain with the Respondent over the effects of its decision to close.

The parties held their only bargaining session on January 6, 1992. At the session, the Unions presented the Respondent with proposals on several subjects. The parties did not reach agreement on any of the subjects. The Unions accepted a counterproposal suggested by the Respondent’s negotiators concerning sick pay, but on such acceptance the Respondent’s negotiators stated that they did not have the authority to make any proposals and could only report the proposal to management.

II. THE JUDGE’S DECISION

The judge found that the Respondent violated Section 8(a)(5) and (1) of the Act by closing its business and terminating its employees without giving the Unions adequate notice and a reasonable opportunity to bargain over the effects of its decision to close. The judge found that, during the year before the announcement, the Respondent actively misled the Unions into believing that the rumors about the closing were false and told them nothing about the closing until presenting them with a fait accompli on the day the sale of assets was finalized and the business closed. The judge concluded that the Respondent’s deliberate failure to give the Unions adequate notice deprived the Unions of the opportunity, at a meaningful time, to engage in bargaining over the effects of its decision to close. [3]

Notwithstanding his finding that the Respondent violated its effects bargaining obligation, the judge concluded that the customary Transmarine backpay remedy was not warranted in the instant case. Specifically, the judge found that the Respondent had already paid its employees 60 days’ wages and benefits to avoid a lawsuit under WARN. [4] In general, that statute requires employees who employ 100 employees to give 60 days’ advance notice of a plant closing, and it makes the employer liable for backpay for each day the employer failed to give such notice. [5] The judge further found the WARN payments are a form of severance pay, that severance pay is an offset to a Board backpay award, and thus any backpay ordered under a Transmarine remedy would be offset by the Respondent’s WARN payments to employees. Because, in the judge’s view, both Transmarine and WARN remedy the same misconduct and WARN payments would likely offset any backpay due under Transmarine, the judge concluded that any further Board-ordered remedy would result in a windfall to the Respondent’s employees. Having found that the Transmarine remedy was not required, the judge concluded that a notice to employees was not necessary and recommended that the complaint be dismissed.

In their exceptions, the General Counsel and Charging Parties contend, inter alia, that the judge erred in finding that the limited Transmarine backpay remedy is offset by the Respondent’s WARN payments. We agree.

III. DISCUSSION

The Board’s power to devise and to compute monetary remedies is broad. “As with the Board’s other remedies, the power to order back pay is for the Board to wield, not for the courts.” NLRB v. J. H. Rutter-Rex Mfg. Co., [61 LC ¶10,518] 396 U.S. 258, 263 (1969). “When the Board, in the exercise of its informed discretion, makes an order of restoration by way of back pay, the order should stand unless it can be shown that the order is a patent attempt to achieve ends other than those which can fairly be said to effectuate the policies of the Act.” NLRB v. Seven-Up Bottling Co., [22 LC ¶67,329] 344 U.S. 344, 346-347 (1953). See Gullet Gin Co. v. NLRB, [19 LC ¶66,123] 340 U.S. 361 (1951) (Board has the discretion to refuse to deduct unemployment compensation payments from backpay).

When an employer has violated its statutory obligation to bargain over the effects of its decision to cease operations, the Board customarily imposes a Transmarine remedy requiring generally that the employer bargain over the effects of its decision and provide backpay from 5 days after the date of the Board’s decision until the occurrence of one of four specified conditions. 170 NLRB at 390. [6] In a subsequent decision, the Board held that severance pay received by employees is a proper deduction from the the amount of backpay due them under a Transmarine remedy, W. R. Grace & Co. [1980 CCH NLRB ¶16,760] 247 NLRB 698, 699 fn. 5 (1980). The burden of establishing that a particular payment qualified as a deduction from gross backpay lies with the employer. See, e.g., NLRB v. S. E. Nichols of Ohio, [97 LC ¶10,000] 704 F.2d 921, 924 (6th Cir. 1983).

Applying these principles here, we must decide whether the Respondent has satisfied its burden of showing that its payments to employees constitute a proper deduction from the backpay that would otherwise be due under Transmarine to remedy the Respondent’s violation of the Act. There is an initial question regarding the nature and purpose of the Respondent’s payments: Were they severance payments or WARN payments? In this connection, the judge noted that there was an inconsistency in the Respondent’s December letter to the Unions because the Respondents stated that it was acting “in compliance with WARN,” yet denied that the payments were “required by WARN.” However, the judge proceeded to find that “the payments which Respondent made were an effort to avoid a suit under WARN,” and he subsequently referred to them as “WARN payments.” The Respondent has not excepted to this finding, and we therefore adopt it in accordance with our usual practice. (“It is the Board’s practice to adopt, as a matter of course, findings ... to which no exceptions are filed.”) [7]

Having determined that the payments in question are properly classified as WARN payments, we now turn to the issue whether such payments are deductible from a Transmarine backpay award. For the following reasons, we find, contrary to the judge, that payments to employees made pursuant to WARN are not an offset to the back pay due under Transmarine. In reaching this conclusion, we rely primarily on the plain language of the WARN statute itself. Section 6 of WARN, 29 U.S.C. §2105, states as follows:

The rights and remedies provided to employees by this Act are in addition to, and not in lieu of, any other contractual or statutory rights and remedies of the employees, and are not intended to alter or affect such rights and remedies, except that the period of notification required by this Act shall run concurrently with any period of notification required by contract or by any other statute.

Thus, the explicit language of the statute makes clear that the Respondent’s remedial obligations under WARN “are in addition to, and not in lieu of,” the Respondent’s remedial obligations under the NLRA, and that WARN remedies “do not alter or affect” NLRA remedies. It is difficult to conceive how Congress could have made its intent any plainer. WARN payments do not offset payments required by other Federal labor laws, such as the NLRA. [8] There is nothing to the contrary in the WARN statute or its legislative history.

Consistent with this interpretation. Section 5(b)(2)(B) of WARN, 29 U.S.C. §2104(a)(2)(B), provides that an employer’s WARN liability may be reduced by any voluntary and unconditional payment to an employee “that is not required by any legal obligation.” Back pay paid to an employee pursuant to a Board Order would, of course, constitute a payment “required by [a] legal obligation.” Thus, amounts paid pursuant to a Transmarine remedy would not reduce an employer’s liability under WARN. In sum, there is an apparent symmetry in the WARN statute: under Section 6, WARN payments do not offset Transmarine payments, and under Section 5(a)(2)(B), Transmarine payments do not offset WARN payments.

Because amounts due employees under WARN are “in addition to” amounts due under the NLRA, the judge erred in finding that a Board remedy in the instant case would result in a “windfall” to employees. On the contrary, both WARN payments and Transmarine payments are necessary if the status quo ante is to be restored and the Respondent’s employees are to be made whole for the losses they incurred. The WARN payments remedy the Respondent’s violation of its obligation to give advance notice of its decision to cease operations. The Transmarine payments remedy the Respondent’s violation of its obligation to allow for meaningful bargaining over the effects of its decision to cease operations. Under the judge’s decision, the employees are compensated for the notice violation, but they receive nothing for the effects bargaining violation. This loss is significant because effects bargaining can result in such additional benefits as pension fund payments, health insurance coverage and conversion rights, preferential hiring at other employer plants, and reference letters for jobs with other employers. See First National Maintenance Corp. v. NLRB, [91 LC ¶12,805] 452 U.S. 666, 681-682 (1981). Unless an effective Transmarine remedy is imposed, the status quo ante with respect to bargaining power will not be restored and the employees’ chance to negotiate for these significant benefits will be unlawfully minimized.

For all these reasons, we conclude, contrary to the judge, that the Respondent’s WARN payments do not “serve as an offset to” or “eliminate the need for” the Transmarine limited backpay remedy the Board customarily issues in cases of this kind.

. . .

[Concurrence]

Member Browning, further concurring: I join the majority’s decision finding that payments made by the Repondent pursuant to the Worker Adjustment and Retraining Notification Act (WARN) are not a proper deduction from the amount of back pay due under the limited backpay remedy of Transmarine Navigation Corp., 170 NLRB 389 (1968). I write separately, however, because I believe that resolution of the instant remedial issue requires, in addition to the majority’s WARN analysis, further consideration of the unique purpose of Transmarine’s limited backpay remedy. Specifically, I would find that when the Respondent’s payments are considered in light of the purpose of Transmarine, such payments, regardless of whether they are considered WARN payments or severance payments, are not a proper offset to Transmarine back pay.

The purpose of the limited backpay component of the Transmarine remedy differs significantly from that of the Board’s usual backpay remedy. Whereas that remedy is designed to make employees whole for wages and benefits lost as a result of the unlawful conduct, [9] the Transmarine backpay remedy--which accompanies an order requiring bargaining over effects of a decision to cease operations--is “designed both to make whole the employees for losses suffered as a result of the violation and to recreate in some practicable manner a situation in which the parties’ bargaining position is not entirely devoid of economic consequences for the Respondent.” Transmarine, supra at 390. In a subsequent case, the Board stated that restoring the union’s bargaining strength is the more important objective. O. L. Willis, Inc., [1986-87 CCH NLRB ¶18,139] 278 NLRB 203, 205 (1986).

Similarly, the courts have recognized that the primary purpose of the Transmarine remedy is to “create an incentive for the Company to bargain in good faith.” Nathan Yorke v. NLRB, 709 F.2d 1138, 1145 (7th Cir. 1983). In Yorke, the court upheld the Board’s authority to grant such a remedy, stating: “Ensuring meaningful bargaining comports with the primary objective of the Act.” Id. Accord: NLRB v. Emsing’s Supermarket, [111 LC ¶11,107] 872 F.2d 1279 (7th Cir. 1989) See also First National Maintenance Corp. v. NLRB, 452 U.S. 666, 681-682 (1981) (“[U]nder Section 8(a)(5), bargaining over the effects of a decision must be conducted in a meaningful manner and at a meaningful time, and the Board may impose sanctions to insure its adequacy.”)

In contrast, the purpose of a make-whole remedy in cases of discrimination in violation of Section 8(a)(3) and (1) of the Act is “to effect ‘a restoration of the situation, as nearly as possible, to that which would have obtained but for illegal discrimination.'” New England Tank Industries, [1964 CCH NLRB ¶13,203] 147 NLRB 598, 599 (1964), quoting Phelps Dodge Corp. v. NLRB, [4 LC ¶51,120] 313 U.S. 177, 194 (1941). Accordingly, the Board has long held that severance payments are a proper offset to a backpay remedy in cases of illegal discrimination. The reasons for this offset, however, are directly related to the purposes of the backpay remedy. As stated by the Board in Fibreboard Paper Products Corp., 180 NLRB 142, 146 (1969), enfd. sub nom United Steelworkers v. NLRB, 436 F.2d 908 (D.C. Cir. 1970), cert. denied 403 U.S. 905 (1971): “the purpose behind a backpay order is to make an employee ‘whole’; it is not to enrich him by ordering the Respondent to pay twice. The rationale for deducting severance payments from backpay in the normal case is that they are in lieu of, or similar to, wages and allowing the employee to have backpay plus the severance allowance would make him more than ‘whole.'”

This rationale for deducting severance payments from make-whole remedies is inapplicable to, and indeed inconsistent with, the Transmarine goal of restoring the union’s bargaining leverage. That leverage is created by essentially putting the employees back on the payroll while effects bargaining takes place, so that the employer has an incentive to reach agreement (or a legitimate impasse) in order to stop the running of its financial obligation. To start the effects bargaining with a “credit” to the employer in the amount of severance payments it made (often long ago) postpones pro tanto the point at which bargaining will in any sense be driven by the employer’s desire to terminate its Transmarine payments to the employees. Any deduction of prior severance payments will dilute the union’s bargaining leverage below the level anticipated by Transmarine and may reduce the remedy to little more than an order requiring effects bargaining with a Transmarine and may reduce the remedy to little more than an order requiring effects bargaining with a union that is “devoid of all economic strength.” Transmarine, supra, citing Royal Plating & Polishing Co., [1966 CCH NLRB ¶20,712] 160 NLRB 990, 997 (1966). It is precisely this type of pro forma bargaining that the Transmarine remedy is intended to prevent.

Furthermore, severance payments previously made by an employer subject to a Transmarine remedy are quite likely to have been only those due under the labor agreement in effect prior to the employer’s decision to close its operation. To credit them against the Transmarine payments effectively requires the union to re-negotiate them in the effects bargaining merely to achieve the status quo ante which Transmarine seeks to restore as the union’s right. It is well established that the duty to bargain over the effects of a decision to terminate a business includes the duty to bargain over such benefits as severance pay. NLRB v. Royal Plating & Polishing Co., [52 LC ¶16,618] 350 F.2d 191, 196 (3d Cir. 1965). While a union may not always be able to achieve an increase in previously negotiated severance benefits, those benefits should at least set the level at which effects bargaining begins, as is the case when an employer fulfills its effects bargaining obligation voluntarily without the coercion of an unfair labor practice charge. An employer that disregards its duty to bargain should not be rewarded for its own misconduct by receiving a credit against Transmarine payments for compensation that it was required to pay by contract. Even in the unlikely event that extra-contractual severance payments were made voluntarily, that unilateral action would still derogate the employer’s bargaining obligation, and crediting the payments against a subsequent Transmarine remedy would reward the wrongdoer for its additional misconduct by diminishing the efficacy of the remedy.

Therefore, I would find that even in circumstances where WARN is not implicated, an employer’s final payments to employees generally should not serve as an offset to Transmarine backpay. In so finding, I would overrule W. R. Grace & Co., 247 NLRB 698, 699 fn. 5 (1980), to the extent that it holds severance pay received by employees to be a proper deduction from the amount of backpay due under the limited backpay component of a Transmarine remedy. [10]

For two reasons, I believe that the Board should overrule W. R. Grace today and not wait for a future case in which the question is more directly presented. First, I expect that such a future case may be difficult to identify, and that this case, by comparison, reaches us in an unusually clear posture. As my colleagues have noted, the Respondent’s failure to except to the judge’s finding that its payments to employees were “WARN payments” has greatly simplified our decisional task. In future cases, the nature and purpose of the employer payments are likely to be disputed and much more difficult to discern.

Second, the question of the continued validity of W. R. Grace, in light of today’s decision, leaves Board law in a highly anomalous state. Employers are now on notice that WARN payments, unlike severance payments, are not a proper deduction from the amount of backpay due under Transmarine. Therefore, so long as W. R. Grace remains Board law, employers about to terminate operations will have an incentive to ignore the union and unilaterally make final payments to employees labeled as “severance payments” rather than “WARN payments.” In this way, an employer could flout its duty to bargain over effects, secure in the knowledge that if charged with a violation of the NLRA, under W. R. Grace its “severance payments” will offset backpay due the employees under Transmarine. In my view, the law should not encourage such semantic manipulation of form over substance. Board remedies should effectuate the policies of the Act, not embolden parties to disobey its specific commands.

Accordingly, I would find that, in addition to the reasons stated by the majority, the limited Transmarine backpay remedy cannot be offset by the Respondent’s payments to employees, because the full amount of backpay due under the Transmarine formula is necessary to ensure that meaningful effects bargaining will occur as contemplated by the Act.