978-1285770178 Case Printout Case CPC-10-08 Part 2

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The Board majority purported to rely on its decision in United Stockyards. But United Stockyards is a case predating

the Board’s landmark decision in Nielsen—and, moreover, a case not even involving the effect of an employer’s bar-

gaining representations regarding its access to a parent company’s capital on the question whether it has pled inabil-

to bargain in good faith by declining to provide financial information on the question whether the employer express-

ly denied an inability to pay. Instead, the Board in Nielsen placed the burden on the union to establish that the em-

ployer’s provision of supporting documentation was necessary to facilitate the bargaining process because the em-

pretation of Stroehmann to be faithful to Stroehmann ‘s holding. The Stroehmann Court did not reject the NLRB‘s

inability-to–pay conclusion because the employer there used “magic words” when explicitly questioned. See Atlanta

Hilton & Tower, 271 N.L.R.B. at 1602 (cautioning against conditioning inability-to-pay analysis on the invocation

of “magic words”). Rather, this Court credited the subsidiary’s access to the parent company’s capital as demonstra-

tive of its ability to pay, noting that both the Board and courts must take care that requests for financial information

yards, however, was decided prior to this Court’s decision in Stroehmann and the Board’s landmark decision in Niel-

sen. Indeed, United Stockyards has been characterized by this Court as an example of pre-Nielsen Board law—law

fundamentally altered by the Nielsen decision. See Torrington Extend–A–Care Emp. Ass’n, 17 F.3d at 589. Moreo-

ver, even if this were not the case, United Stockyards does not even address bargaining representations regarding a

corporate parent’s willingness to provide funding, much less elucidate the effect of such representations on whether

should only extend to information “reasonably related to the rationalization of bargaining.” 95 F.3d at 222. The pro-

vision of relevant information furthers the NLRA’s requirement of “good faith” bargaining—i.e., bargaining that is

both honest and informed —by “reduc [ing] the likelihood of closed-mind bargaining and … enhanc[ing] the chances

that the parties will reach an agreement suitable to their major needs.” Id.; see also Truitt, 351 U.S. at 152, 76 S.Ct.

753 (“Good–faith bargaining necessarily requires that claims made by either bargainer should be honest claims.”);

The Supreme Court cautioned in Truitt that it does not automatically follow that employees are entitled to sub-

stantiating evidence “in every case in which economic inability is raised as an argument against increased wages.”

demanding a full consideration of the negotiating situation as well as the parties’ statements, and we follow Stroeh–

mann ‘s holding that considering a parent’s desire to fund the struggling subsidiary is important and often indicative

of both an ability to pay and a good faith bargaining position premised on this reality. To the extent that the Board

insists that United Stockyards provides support for its conclusion and that Stroehmann is not to the contrary, it

should clarify its position through reasoned decisionmaking.

have explained:

The union is not automatically entitled to substantiating information in the exact manner requested in every case

where the employer claims an inability to pay a wage increase. “Each case turn upon its particular facts. The in-

quiry must always be whether or not under the circumstances of the particular case the statutory obligation to bar-

for its conclusion that only a photocopy could afford the Union sufficient access to the 2007 Financial Statement to

substantiate Stella D‘oro’s claims regarding its unprofitability.

In upholding the ALJ‘s conclusion that Stella D’oro failed to bargain in good faith by refusing the Union a pho-

tocopy of the 2007 Financial Statement, the Board majority credited the ALJ’s findings that the volume and nature

& Signal, Inc. See Union Switch & Signal, Inc., 316 N.L.R.B. 1025, 1033 (1995) (finding it too laborious to copy by

hand an air-quality study with 12 pages of detailed tabulations); Am. Tel. & Tel. Co., 250 N.L.R.B. 47, 54 (1980),

enforced sub nom. Commc’n Workers of Am. AFL–CIO, Local 1051 v. NLRB, 644 F.2d 923 (1st Cir.1981) (finding

meeting, Alston requested to see the information that supported the 2007 losses claimed in Stella D‘oro’s financial

presentation. Jacoby promised to bring the 2007 Financial Statement reflecting these losses to the next bargaining

session, and Alston agreed. At the very next session, Alston reviewed the operating loss data in the audited 2007

Financial Statement and was thus able to confirm that Stella D’oro had, in fact, incurred approximately $1.6 million

in losses for that year, as asserted by the Company at the first bargaining session.

cial statement would have imposed little burden on the Union’s attorney or accountant, as their offices were in mid-

town Manhattan near Jacoby’s office.” Stella D‘oro Biscuit, 2010 WL 3446122, at *16. But after Alston consulted

with Union attorney Nikolaidis, the Union reneged on this arrangement, despite the fact that the 2007 Financial

Statement, which we have examined, is a “straightforward and uncomplicated document that could easily be re-

viewed in one visit.” Id. Indeed, except at the bargaining session on June 4, 2008, the Union did not ever take ad-

gain in good faith in the hope that the Board will provide a legal remedy”); Nielsen II, 977 F.2d at 1170.

In examining the document in full, we also disagree with the Board’s conclusion that the document is analogous

to the detailed documents at issue in AT & T and Union Switch & Signal. As discussed, the Union acknowledged

that the financial summary that Stella D’oro provided at the first negotiation was drawn from the Statement of Oper–

where the Board concluded that a photocopy was not necessary because the company did not deny the union an op-

portunity to take notes, and neither the volume nor the nature of the information warranted requiring the employer to

furnish copies. 206 N.L.R.B. at 466–67.

N.L.R.B. 475, 478 (1967) ( “[A]fter bargaining to an impasse, … an employer does not violate the [NLRA] by mak-

ing unilateral changes that are reasonably comprehended within his pre–impasse proposals.”).

[5][6] Finally, Stella D‘oro did not commit an unfair labor practice by refusing to reinstate the striking Union

members following their offer to return to work in May 2009 under the terms of the prior collective bargaining

For two reasons, Stella D‘oro did not violate this rule. First, as we have already explained, Stella D’oro did not com-

mit an unfair labor practice, and therefore the strikers did not qualify for protection as strikers opposing an unfair

labor practice. Cf. Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 278, 76 S.Ct. 349, 100 L.Ed. 309 (1956) (

“[P]etitioners’ unfair labor practices provide adequate ground for the orderly strike that occurred here. Under those

circumstances, the striking employees do not lose their status and are entitled to reinstatement….”). Second, the em-

To summarize, we conclude that:

(1) There is insufficient evidence in the record to support the Board’s conclusion that Stella D’oro pled an “inabil-

ity to pay,” thereby triggering a duty for the Company to substantiate those assertions; moreover, the Board erro–

neously disregarded settled law in failing to properly apply or distinguish through reasoned decisionmaking

Accordingly, SDBC‘s petition for review of the NLRB’s decision is GRANTED, and the NLRB’s cross-petition

for enforcement of its August 27 order is DENIED.

its operations were unprofitable. We cannot enforce the Board’s decision to that effect, however, because the Board

did not adequately explain its reasons for not following our decision in Stroehmann Bakeries, Inc. v. NLRB, 95 F.3d

218 (2d Cir.1996), which equated the concept of “inability to pay” with insolvency. When applying the National

Labor Relations Act, panels of this Court are bound by the decisions of prior panels unless overruled by the Su-

preme Court or an en banc panel of this Court, In re Zarnel, 619 F.3d 156, 168 (2d Cir.2010), or controverted

ity to pay.” In this event, the Board should explain that an employer claims an “inability to pay” for particular labor

costs, within the meaning of the Supreme Court‘s decision in Truitt, when the employer asserts in the course of bar–

gaining that its operations are unprofitable given those costs.

the give and take of bargaining, it is important enough to require some sort of proof of its accuracy. And it would

certainly not be farfetched for a trier of fact to reach the conclusion that bargaining lacks good faith when an em-

ployer mechanically repeats a claim of inability to pay without making the slightest effort to substantiate the

claim.

a competitive disadvantage.” Torrington Extend–A–Care Emp. Ass‘n v. NLRB, 17 F.3d 580, 588 (2d Cir.1994). The

Board settled this question in Nielsen Lithographing Co., 305 N.L.R.B. 697 (1991), holding that a “claim of compet-

itive disadvantage is not the same as a claim of financial inability to pay,” id. at 699, and that the difference between

statements to the Union … fairly suggests that the [employer] would be unprofitable and thus unable to pay during

the term of the contract under negotiation.” (emphases supplied)). In other words, as the Board explained two years

after deciding Nielsen, a duty to substantiate can arise when an employer asserts in the course of bargaining that it

cannot “economically afford” existing labor costs. Shell Co. (Puerto Rico) Ltd., 313 N.L.R.B. 133, 133 (1993); see

also Buffalo Concrete, 276 N.L.R.B. 839, 840 (1985) ( “inability to afford the cost”). By contrast, a duty to substan–

Pressmen, 538 F.2d at 501 (emphasis supplied).

FN1. Claims of unprofitability must be “put in issue,” N.Y. Printing Pressmen, 538 F.2d at 501, to trigger a

duty to substantiate. See, e.g., Atlanta Hilton & Tower, 271 N.L.R.B. 1600, 1602 (1984) (no asserted “ina-

bility to pay” where employer would not confirm or deny that it was profitable). For this reason, an em-

opinion) (emphasis supplied).

Unfortunately, the Board seems to have confused matters in Nielsen by referring to an employer’s “losses of

business to competitors,” 305 N.L.R.B. at 697, as “business losses,” id. at 700. The Board explained that “the em-

Nielsen Lithographing Co. v. NLRB, 854 F.2d 1063, 1065 (7th Cir.1988) (“Nielsen I ”), but the parties

agreed that the employer could be profitable in the short term, see id. at 1064. As the Court of Appeals for

the Seventh Circuit (the “Seventh Circuit”) explained in denying the Board’s first petition for enforcement,

dissenting) (equating “business losses” with “loss of business”); id. at 708 (“[T]he [employer] directly

placed its economic condition at issue by its repeated references to the specific loss of jobs and business

that already had occurred, and by its statements that additional losses would continue to occur in the ab–

sence of union concessions.” (emphases supplied)). The Seventh Circuit decision enforcing the Board’s

Nielsen order also emphasized the importance of claims of unprofitability: “If the employer claims that it

The Board’s use of the term “business losses” to mean “losses of business to competitors” was unintentionally

confusing. In normal parlance, the term “business losses” refers to the depletion of assets (or accumulation of debt)

resulting from “a business operation where expenditures exceed receipts”—not losses of a business’s customers or

market share. JOHN BLACK ET AL., OXFORD DICTIONARY OF ECONOMICS (3d ed. 2009). In other words, a

company earning “profit” cannot also incur “business losses” because in this context those terms are antonyms.

ing, Inc., 342 N.L.R.B. 1125, 1126 (2004) (emphases supplied). The Board has not explained why “inabil–

ity to pay” has evolved from meaning that an employer “could not afford” certain labor costs, see, e.g., N.Y.

Printing Pressmen, 538 F.2d at 499, to meaning literal insolvency.

Our opinion in Stroehmann Bakeries, Inc. v. NLRB, 95 F.3d 218 (2d Cir.1996), suggests that we may have mis-

The Board need not, and should not, perpetuate that mistake. Instead, it can, and should, clarify that an employ-

er’s assertion of unprofitability is an assertion of “inability to pay” for labor costs within the meaning of Truitt. In-

deed, the Board made that point explicitly in Nielsen, 305 N.L.R.B. at 701, as did the Court of Appeals decision

employer to provide information that is needed by the bargaining representative for the proper performance of its

duties.” NLRB v. Acme Indus. Co., 385 U.S. 432, 435–36, 87 S.Ct. 565, 17 L.Ed.2d 495 (1967); see also Stroeh–

mann, 95 F.3d at 222 (“Good faith requires that an employer explain its positions on various issues and that obliga-

tion in turn may require that it provide relevant back–up materials, such as financial information.”). Whether an em-

ployer’s assertions in bargaining give rise to this “general obligation” to substantiate will always depend on the total-

ing, or at least [to] making some concessions,” Nielsen I, 854 F.2d at 1065, the duty to substantiate can, and general-

ly should, apply.

FN4. I agree with Judge Livingston that Stroehmann adopts a narrow understanding of the term “inability

to pay” an interpretation that I encourage the Board to reject along the lines proposed here. Importantly,

the circumstances demonstrated that the employer did not place its unprofitability at issue in bargaining.

Id.; see also note 1, ante (assertions must be “put in issue” to trigger a duty to substantiate). And here, be–

cause the Board’s decision is based on a purported claim of “inability to pay,” and because the Board did

not offer a reasoned explanation for departing from our interpretation of that term in Stroehmann, I join

Judge Livingston’s opinion in full.