     06-4440-ag
     Unite Here v. NLRB
 1
 2                            UNITED STATES COURT OF APPEALS
 3
 4                                  FOR THE SECOND CIRCUIT
 5
 6                                     August Term 2007
 7
 8    (Argued: April 7, 2008                          Decided: October 14, 2008)
 9
10                                  Docket No. 06-4440-ag
11
12   -----------------------------------------------------x
13
14   UNITE HERE,
15
16                    Petitioner,
17
18                              -- v. --
19
20   NATIONAL LABOR RELATIONS BOARD,
21
22
23                    Respondent.
24
25   -----------------------------------------------------x
26
27   B e f o r e :         WALKER, CABRANES, and RAGGI, Circuit Judges.
28

29           Petitioner Union appeals from a decision of the National

30   Labor Relations Board that found that a one-time stock award

31   given in an equal amount to all employees of a company after an

32   initial public stock offering was a gift and therefore not

33   subject to mandatory bargaining.             The petition for review is

34   denied.

35

36




                                              1
 1                                  IRA JAY KATZ, Associate General
 2                                  Counsel (David M. Prouty, General
 3                                  Counsel, on the brief), UNITE HERE,
 4                                  New York, NY, for Petitioner.
 5
 6                                  RICHARD A. COHEN, Senior Attorney
 7                                  (Ronald Meisburg, General Counsel,
 8                                  John E. Higgins, Jr., Deputy
 9                                  General Counsel, John H. Ferguson,
10                                  Associate General Counsel, Aileen
11                                  A. Armstrong, Deputy Associate
12                                  General Counsel, Robert J.
13                                  Englehart, Supervisory Attorney, on
14                                  the brief) National Labor
15                                  Relations Board, Washington, DC,
16                                  for Respondent.
17
18
19
20   JOHN M. WALKER, JR., Circuit Judge:

21        Petitioner, Unite Here (“the Union”), seeks review of a

22   National Labor Relations Board (“NLRB” or “Board”) order

23   dismissing a portion of the Union’s complaint alleging unfair

24   labor practices against employer North American Pipe Corporation

25   (“NAP”).   The Union claimed that NAP was required to bargain over

26   a one-time stock award before distributing it to NAP’s employees

27   pursuant to Sections 8(a)(1) and (5) of the National Labor

28   Relations Act (“NLRA”).   Section 8(a)(1) of the NLRA makes it

29   unlawful for an employer “to interfere with, restrain, or coerce

30   employees in the exercise of the rights guaranteed [under the

31   NLRA],” and Section 8(a)(5) makes it unlawful for an employer “to


                                      2
1    refuse to bargain collectively with the representatives of his

2    employees.”   29 U.S.C. § 158(a)(1), (5).

3         On appeal, the Union argues that the NLRB erred by applying

4    an incorrect legal standard when it determined that the stock

5    award qualified as a non-bargainable gift.    The Union also

6    contends that the NLRB’s ultimate factual determination was

7    erroneous.

8

9                                 BACKGROUND

10        Westlake Chemical Corporation (“Westlake”), of which NAP is

11   a subsidiary, operates thirteen manufacturing facilities in the

12   United States, with approximately 1500 employees.    The Union

13   represents fifty-six NAP employees at one of Westlake’s

14   manufacturing facilities.

15        Westlake was privately owned until August 11, 2004, when

16   Westlake conducted an initial public offering (“IPO”) of stock.

17   The IPO was successful, and, a few days after the IPO, Westlake

18   decided to make a one-time transfer of 100 shares of its stock to

19   every Westlake employee.    In a memorandum to all Westlake

20   employees, Westlake announced:

21        In recognition of this important historic company event and
22        the significant contribution made by each of you toward the
23        growth and success of the company, the Board of Directors

                                       3
 1        has authorized an award of 100 shares of common stock to
 2        each full-time, regular employee with at least six months of
 3        service as of today. These shares will be awarded to you
 4        initially in the form of stock units, and shares will be
 5        distributed to you at the conclusion of six months, provided
 6        you remained a regular, full-time employee during that
 7        period.
 8
 9        Please accept our appreciation for your efforts. We are
10        confident that as we work together we can continue to build
11        a strong and successful Westlake Chemical Corporation for
12        all of our shareholders, including each of you.
13
14   Westlake followed this announcement with a letter to each

15   employee explaining that Westlake had taken steps to account for

16   the tax obligations applicable to the award of stock and that

17   each employee could elect to have the requisite tax paid either

18   by withholding shares of common stock or by withholding cash from

19   the employee’s base pay.   Westlake awarded the same number of

20   shares to all eligible hourly, supervisory, and management

21   employees at all of its facilities.   The value of the 100 shares

22   was approximately $1450 at the time of their issuance.

23        Westlake never sought to bargain with the Union over the

24   stock award.   After learning of the stock award, the Union filed

25   an unfair labor practice complaint alleging among other things

26   that NAP, through whom Westlake had distributed the shares, had

27   violated Sections 8(a)(1) and (5) of the NLRA, 29 U.S.C. §

28   158(a)(1),(5), by awarding shares of stock to the employees it


                                      4
1    represented without affording the Union prior notice and an

2    opportunity to bargain.    The Board, with one member dissenting,

3    found that no violation had occurred because the stock award was

4    a one-time-only gift tied to the success of the IPO and that the

5    award bore an insufficient connection to wages to bring it within

6    the scope of the NLRA under the doctrine of Benchmark Indus., 270

7    N.L.R.B. 22 (1984), aff’d, Amalgamated Clothing v. NLRB, 760 F.2d

8    267 (5th Cir. 1985) (unpublished table decision).

9         The Union now appeals from the NLRB’s decision.

10

11                              DISCUSSION

12        Congress has delegated authority to the National Labor

13   Relations Board to decide whether a specific grievance is subject

14   to mandatory bargaining.   Olivetti Office U.S.A., Inc. v. NLRB,

15   926 F.2d 181, 185 (2d Cir. 1991).     “[M]indful that decisions

16   based upon the Board’s expertise should receive, pursuant to

17   longstanding Supreme Court precedent, ‘considerable deference,’”

18   Ewing v. NLRB, 861 F.2d 353, 357 (2d Cir. 1988) (citations

19   omitted), “we afford the Board ‘a degree of legal leeway,’” NLRB

20   v. Caval Tool Div., 262 F.3d 184, 188 (2d Cir. 2001) (citation

21   omitted).   “This court [therefore] reviews the Board’s legal

22   conclusions to ensure that they have a reasonable basis in law.”


                                       5
1    Caval Tool Div., 262 F.3d at 188.      Its legal conclusions will be

2    disturbed only if found to be “arbitrary or capricious.”

3    Laborers’ Int’l Union of N. Am. v. NLRB, 945 F.2d 55, 58 (2d Cir.

4    1991).

5         “Factual findings of the Board will not be disturbed if they

6    are supported by substantial evidence in light of the record as a

7    whole.”   Caval Tool Div., 262 F.3d at 188.     When reviewing for

8    substantial evidence, our inquiry is limited to “determin[ing]

9    whether the supporting evidence, even if not preponderating in

10   this court’s view, nevertheless provides a sufficient basis for

11   the Board’s decision.”   NLRB v. Interboro Contractors, Inc., 388

12   F.2d 495, 499 (2d Cir. 1967).

13        The issue before us is whether Westlake’s award of its

14   shares amounted to a unilateral increase in wages or an

15   alteration of the terms and conditions of employment such that,

16   in the absence of bargaining, it violated NLRA §§ 8(a)(1) and

17   (5), 29 U.S.C. § 158(a)(1), (5).       See NLRB v. Katz, 369 U.S. 736,

18   747 (1962) (“Unilateral action by an employer without prior

19   discussion with the union does amount to a refusal to negotiate

20   about the affected conditions of employment under negotiation,

21   and must of necessity obstruct bargaining, contrary to the

22   congressional policy.”).

                                        6
1    I.   The Board’s Legal Conclusions

2         The Union contends that the Board applied an incorrect legal

3    standard because “gift doctrine case[ ]law” requires that, to be

4    non-bargainable, an award must be of token value or given on

5    holidays such as Christmas.   This argument challenges the Board’s

6    legal determination, which we will not disturb unless it is

7    arbitrary and capricious.   The Union’s argument is without merit,

8    and we perceive nothing erroneous, much less arbitrary and

9    capricious, in the Board’s rejection of it.

10        The question of whether an award constitutes wages and

11   therefore is the subject of mandatory bargaining turns upon

12   whether the award is “so tied to the remuneration which employees

13   received for their work that [it was] in fact a part of it.”

14   NLRB v. Niles-Bement-Pond Co., 199 F.2d 713, 714 (2d Cir. 1952).

15   In ascertaining whether a stock award is so tied to remuneration

16   that it must be the subject of bargaining, the Board looks to the

17   relationship of the award to other employment-related factors,

18   including work performance, wages, hours worked, seniority, and

19   production.   See Benchmark Indus., 270 N.L.R.B. at 22.   An award

20   that is sufficiently tied to these work-related factors is

21   considered part of the overall compensation that an employee

22   receives and is therefore mandatorily bargainable.   For example,

                                      7
1    a bonus has been considered “employment-related” when it was tied

2    to the company’s profits, Waxie Sanitary Supply, 337 N.L.R.B.

3    303, 304 (2001), or when it was paid based on supervisory

4    recommendations and work performance, Radio Television Technical

5    Sch., Inc. v. NLRB, 488 F.2d 457, 460 (3d Cir. 1973).      An

6    additional consideration in the analysis is the regularity with

7    which similar awards or payments have been made in the past.

8    Bonuses that are not tied to other employment-related factors

9    have been found to be the subject of mandatory bargaining when

10   they were “paid over a sufficient length of time to have become a

11   reasonable expectation of the employees and, therefore, part of

12   their anticipated remuneration.”       NLRB v. Electro Vector, Inc.,

13   539 F.2d 35, 37 (9th Cir. 1976) (citation and internal quotation

14   marks omitted); accord United Shoe Mach. Corp., 96 N.L.R.B. 1309,

15   1314-15 (1951).

16        Contrary to the Union’s argument, the determination of

17   whether an award or bonus is bargainable, does not depend on

18   whether it is of “token value.”    Although the Board has

19   demonstrated its reluctance to hold that awards of nominal value

20   are subject to mandatory negotiation, see, e.g., Benchmark

21   Indus., 270 N.L.R.B. at 22 (describing dissent’s contention that

22   a dinner and a five-pound ham constituted wages as “overly

                                        8
1    legalistic”), it has found bonuses of significant value not to be

2    the subject of mandatory bargaining where the bonus is

3    insufficiently tied to employment-related factors and not “of

4    such a fixed nature . . . to have become a reasonable expectation

5    of the employees and, therefore, part of their anticipated

6    remuneration,” Phelps Dodge Mining Co. v. NLRB, 22 F.3d 1493,

7    1496 (10th Cir. 1994) (citation and internal quotation marks

8    omitted) (holding that “appreciation” bonuses, one of which was

9    given to all employees in an amount equal to eighty hours of work

10   at each employee’s standard pay rate, were not subject to

11   mandatory bargaining); see also NLRB v. Wonder State Mfg. Co.,

12   344 F.2d 210, 213 (8th Cir. 1965) (finding award of one week’s

13   pay to be a gift and not subject to mandatory bargaining).

14        Whether the award is given during the holiday season is

15   similarly of little consequence.       There is nothing in the Board’s

16   established test that limits the gift doctrine to holiday gifts.

17   To be sure, many awards given during the holidays have been found

18   to bear an insufficient relationship to employment-related

19   factors to constitute part of the employee’s wages, but we have

20   found no case restricting the gift doctrine’s applicability to a

21   particular holiday or season.   The Board acted reasonably in

22   refusing to recognize such an arbitrary and unprincipled

                                        9
1    requirement.

2           We thus find that the Board did not err, much less abuse

3    its discretion in rejecting the Union’s contention that the gift

4    doctrine is limited to awards of token value or those given at

5    Christmas time.

6

7    II.   The Board’s Factual Findings

8          The Union challenges the Board’s factual findings on the

9    same grounds that were the bases for one Board member’s dissent.

10   The dissent believed that the stock award was sufficiently tied

11   to compensation that it should have been mandatorily bargainable.

12   The ultimate question of whether the stock award is so tied to

13   remuneration that it is in fact a part of it is “a question of

14   fact [and if] the Board’s finding to that effect [is] supported

15   by substantial evidence it ends the matter.”   Niles-Bemont-Pond

16   Co., 199 F.2d at 714.

17         First, the dissent noted that Westlake made preparations to

18   withhold taxes from the stock award, which is consistent with a

19   view that the stock award constituted wages.   The majority

20   acknowledged that this factor might cut against treatment of the

21   stock award as non-bargainable, but concluded that this factor

22   was outweighed by other considerations.

                                     10
1         Second, the dissent also argued that the stock award was

2    tied to the number of hours worked, in that only full-time

3    employees were eligible for the award.   The majority pointed out,

4    however, that the respondent never made this argument before the

5    Board, and it noted both that the record was barren as to how

6    Westlake determined full-time employment and that the Union

7    proffered no evidence that any Union member was excluded because

8    of this condition.

9         Last, the dissent argued that the award was tied to

10   seniority because only employees who had worked for Westlake for

11   six months were eligible and that the award was a condition of

12   employment because it did not vest until the employee remained in

13   full-time employment for six additional months.   The majority

14   found the link between the prescribed time periods set forth in

15   the award announcement and the stock award to be “far too tenuous

16   to support a conclusion that employees were receiving the stock

17   because of their performance.”   N. Am. Pipe Corp., 347 N.L.R.B.

18   No. 78, 2006-2007 NLRB Dec. ¶ 17174, at 4 (July 31, 2006).    The

19   majority concluded that the employees received the stock award

20   because the successful IPO permitted it and not as a reward for

21   working at NAP for six months prior to and six months after the

22   stock award.

                                      11
1         There is no basis to disturb the majority’s factual

2    conclusions.   The stock award here was a one-time event, given to

3    each employee, regardless of rank, in an equal amount.    The

4    record fully supports the majority’s finding that the stock was

5    issued to mark the success of the IPO and not because NAP sought

6    to compensate those employees who had been at Westlake for six

7    months and to entice those employees to stay for at least six

8    more.   Though the dissent made colorable arguments as to why the

9    Board could have concluded that some of the employment-related

10   factors supported a finding that the stock award should be

11   treated as wages, the majority’s conclusion is supported by

12   substantial evidence.

13        In sum, we find that the Board’s legal determinations were

14   not arbitrary and capricious and that the Board’s ultimate

15   determination is supported by substantial evidence.

16

17                                  CONCLUSION

18        For the foregoing reasons, the petition is DENIED.

19




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