Finch, Pruyn & Co., Inc., (2007)

Finch, Pruyn & Company, Inc. and Paper, Allied-Industrial, Chemical & Energy Workers International Union, AFL–CIO.[1] Cases 3–CA–23461–1 and 3–CA–23461–2

January 31, 2007

DECISION AND ORDER

By Chairman Battista and Members Schaumber and Walsh

i. introduction

The principal issue in this case is whether the Respondent, Finch, Pruyn & Company, Inc., violated Section 8(a)(5) and (1) of the National Labor Relations Act by unilaterally subcontracting during an economic strike for the pulp needed for its papermaking operation. We find, in agreement with the judge, that the Respondent’s subcontracting was a lawful temporary measure to maintain its operations during the strike. Accordingly, we affirm the judge’s findings that the subcontracting did not convert the economic strike to an unfair labor practice strike, and that the strikers remained economic strikers. Further, we find that the Respondent did not violate the Act by continuing its unilateral subcontracting after the strike had ended because of the absence of a union request to bargain about the poststrike subcontracting.

The case also presents two allegations that the Respondent failed to furnish requested information in violation of Section 8(a)(5) and (1) of the Act. First, the judge dismissed an allegation that the Respondent unlawfully refused to provide Paper, Allied-Industrial, Chemical & Energy Workers International Union, AFL–CIO, Local 18 (Local 18) with copies of the Respondent’s subcontracts for pulp. Second, the judge found that the Respondent unlawfully refused to provide information, requested by both Local 18 and Paper, Allied-Industrial, Chemical & Energy Workers International Union, AFL–CIO, Local 155 (Local 155), regarding the preemployment drug testing of permanent replacement workers without offering to bargain over its asserted confidentiality concerns. For the reasons discussed below, we reverse the judge in both instances.

Finally, the complaint alleges that the Respondent unlawfully failed to recall employee Bernard Palmer after the strike had ended. Contrary to the judge, we find that the Respondent violated Section 8(a)(5) and (1) by unilaterally eliminating Palmer’s prestrike “pcc oiler” position. However, we agree with the judge that the Respondent did not violate Section 8(a)(3) and (1) by eliminating Palmer’s position or by failing to recall him to another available position.

We shall address these issues in turn.[2]

ii. the subcontracting and related issues

1. Factual Background

   The Respondent operates a paper mill in Glens Falls, New York. The papermaking process requires pulp, which the Respondent produces in its own pulp mill located at the Glens Falls facility. Local 155 represents a unit of the paper mill employees. Local 18 represents a separate unit of the pulp mill employees. This case arose when the Locals (hereafter collectively referred to as the Union) commenced an economic strike against the Respondent after unsuccessful contract negotiations.[3]

   Bargaining for successor collective-bargaining agreements commenced about May 14, 2001.4 At the outset of the negotiations, the Respondent’s President and Chief Executive Officer, Richard Carota, advised the Union that the Respondent needed significant economic and labor cost concessions to remain competitive. Carota emphasized that employees of a nearby competitor were also represented by PACE but that they received significantly lower wages and benefits than the Respondent’s union-represented employees. Carota stressed that this situation placed the Respondent at a substantial labor cost disadvantage. The record shows that the Respondent lost approximately $6 million in 2001.[5]

   Between May 14 and June 15, the parties engaged in more than 40 bargaining sessions. On June 15, the Respondent declared impasse and implemented its final offer.[6] The Union commenced an economic strike the next day. It is undisputed at this point that the strike initially resulted from the parties’ inability to agree on economic issues.

   The Respondent previously had decided that it would not attempt to operate its pulp mill during a strike. Rather, the Respondent had developed a plan to keep its paper mill running by purchasing hardwood kraft pulp on the open market. The plan was based on the Respondent’s knowledge that pulp was widely available, and at a price reaching an historic low due to an industry-wide recession. Consistent with its prestrike planning, on June 18 the Respondent began placing a series of “spot” orders to purchase pulp. The Respondent placed 15 spot orders between June 18 and July 30, for delivery through December.[7]

   The strike continued through the summer of 2001. During this period, the Respondent discovered that it was able to maintain the quality of its manufactured paper products with the use of the purchased pulp.[8] The Respondent further realized that it could buy pulp more cheaply than it could produce it because the market price of pulp remained historically low. The Respondent continuously monitored the quality, price, and competitiveness of its operations using market pulp.

   The parties’ negotiations continued in September. In early October, the Union rejected the Respondent’s revised last best offer. On October 15, the Respondent began to hire permanent replacements in all areas of its facility, except the pulp mill, which remained idle.

   At the November 13 negotiating session, the Union inquired about the status of the pulp mill. The Respondent informed it that “no determination had been made to reactivate it as the price of purchased pulp was still below what it costs to make [our] own.” The Respondent reaffirmed in writing the following day that the pulp mill is “down for the foreseeable future.”[9]

   On November 21, all seven unions ratified the Respondent’s proposed agreements and the strike ended. Separate contracts were signed for each union, and recall agreements for strikers were signed on November 26.

   When the strike ended, the Respondent decided to keep the pulp mill closed for the foreseeable future and to continue to purchase pulp on the open market. The Respondent kept its pulp mill closed throughout 2002. During that year it made approximately 85 separate spot purchases of market pulp to maintain production.

   On February 26, 2003, the Respondent advised its employees that it would reopen the pulp mill in June 2003. The Respondent based its decision on two factors: the market price of pulp had begun to rise, and the Respondent faced a lengthy re-permitting process for the pulp mill if it remained closed any longer. As planned, the Respondent reopened its pulp mill in early June 2003, and recalled the majority of the former pulp mill strikers to their prestrike positions.

2. The Judge’s Decision[10]

   The judge found that the Respondent’s spot purchases of pulp during the strike were a lawful measure undertaken to remain in business while countering the effects of the strike. The judge relied on well-established precedent holding that an employer may lawfully employ temporary subcontracting to continue operations in the face of an economic strike.[11] The judge explained that the Respondent acted consistently with its strike contingency plan and without anti-union animus. Accordingly, the judge concluded that the Respondent permissibly subcontracted unit work during the strike without bargaining with the Union.

   The judge further found that the Respondent’s decision to continue purchasing market pulp after the strike ended was undertaken solely to maintain its papermaking operations. The judge observed that the Union never made a request to negotiate with the Respondent over the continued purchases of market pulp, or over the decision not to reopen the pulp mill at the end of the strike. Therefore, the judge found that the Respondent did not violate Section 8(a)(5) and (1) of the Act by its continued subcontracting for pulp.[12]

   Having rejected the General Counsel’s core subcontracting allegation, the judge rejected the concomitant strike conversion and striker reinstatement allegations as well. The judge explained that the economic strike could not have converted to an unfair labor practice strike as a result of the Respondent’s lawful subcontracting. The judge observed, moreover, that there was neither subjective nor objective evidence that the subcontracting prolonged the strike.

   The judge likewise found that the strikers remained economic strikers. The judge determined that, because the subcontracting was lawful, the strikers did not become unfair labor practice strikers, and the Respondent properly recalled economic strikers in accord with the parties’ negotiated recall agreements.[13]

3. Discussion

   1. The Respondent’s subcontracting during the strike

      The Respondent’s unilateral purchases of pulp during the Union’s economic strike were a lawful temporary measure to maintain its business operations. It is settled that, “when workers strike, an employer may temporarily subcontract unit work in order ‘to enable the employer to continue operating in an emergency situation thrust upon it by a strike.’” Naperville Ready Mix v. NLRB, 242 F.3d 744, 756 (7th Cir. 2001), cert. denied 534 U.S. 1040 (2001), quoting American Cyanamid Co. v. NLRB, 592 F.2d 356, 360 (7th Cir. 1979). Accord: Fairfield Tower Condominium Assn., supra at 924 (legitimate employer measures to maintain operations during a strike include temporarily contracting out unit work). The Respondent’s actions were fully consistent with this principle.

      The Respondent began purchasing pulp as a means to continue its operations during the Unions economic strike. Significantly, the Respondent tailored its purchases to the expected duration of the strike. The Respondent placed orders for delivery only through December 2001, which matched the Respondents reasonable projection of the strikes duration based on the strikers eligibility for 26 weeks of unemployment insurance. In these...