[00:00:01] Speaker 05:
Case 14-1021 et al, Mike Sells Potato Chip Company Petitioner, the National Labor Relations Board.

[00:00:10] Speaker 05:
Ms.

[00:00:11] Speaker 05:
Asbrock for the petitioner, Mr. Jost for the respondent.

[00:00:30] Speaker 01:
Good morning.

[00:00:32] Speaker 00:
Good morning.

[00:00:33] Speaker 00:
May it please the court.

[00:00:35] Speaker 00:
This case arose when Teamsters Local 957 filed unfair labor practice charges against Mike Sell's potato chip company, alleging that the company unilaterally implemented and unlawfully implemented its last, best, and final offers for two bargaining units.

[00:00:50] Speaker 00:
The lawfulness of the company's implementation depends on whether the parties were at impasse as of November 19, 2012, which is the date of implementation.

[00:00:58] Speaker 00:
The ALJ...

[00:01:02] Speaker 00:
Sorry, go ahead.

[00:01:03] Speaker 00:
The ALJ and the NLRB found that no impasse existed, but the record as a whole does not contain substantial evidence to support this finding.

[00:01:12] Speaker 01:
Can I ask just one thing, and I recognize it's outside the record, but what happened after March 20th, 2013?

[00:01:18] Speaker 00:
It is outside the record, Your Honor, but the parties met, I believe, one or two additional times in April, I want to say.

[00:01:27] Speaker 00:
They then did not meet again until June of 2013.

[00:01:33] Speaker 00:
The parties then did not meet again until December of 2013.

[00:01:38] Speaker 00:
And the parties then did not meet again until June of 2014.

[00:01:41] Speaker 00:
OK, so you're still operating then under the board's order at this point?

[00:01:46] Speaker 00:
Yes, that is correct, under the implemented terms.

[00:01:48] Speaker 00:
And no further negotiations have been had since June of 2014.

[00:01:52] Speaker 01:
And when do you say the impasse actually happened?

[00:01:55] Speaker 01:
Was it the 14th, the 15th, the 17th of November?

[00:01:59] Speaker 01:
When did it actually happen?

[00:02:02] Speaker 00:
The company believes, and it had submitted its last, best, and final offer as of November 14th.

[00:02:11] Speaker 00:
At that meeting, there is evidence that Ms.

[00:02:13] Speaker 00:
Willie asked the union to take its offer to a vote.

[00:02:18] Speaker 00:
To the extent that that was not clear, the very next day, Ms.

[00:02:20] Speaker 00:
Willie confirmed in writing

[00:02:22] Speaker 00:
that its last offer, the company's last offer, was as us, best and final.

[00:02:27] Speaker 01:
November 15th.

[00:02:28] Speaker 00:
In a letter of the 15th.

[00:02:31] Speaker 01:
But that's the same day, isn't it?

[00:02:32] Speaker 01:
The exact same day in the warehouse negotiations, you said, you know what, let's take these difficult issues of pensions and health care, at least, over to, and we'll deal with that in the route driver negotiations.

[00:02:44] Speaker 01:
November 15th was the same day.

[00:02:46] Speaker 01:
Why would you say that there if, in fact, you actually thought you were at an impasse in those negotiations?

[00:02:51] Speaker 00:
The union for the first time during the November 15th negotiations said that they wanted to defer the issue of health care.

[00:02:57] Speaker 00:
and pensions to the route sales.

[00:03:00] Speaker 00:
At that point, the... Did you agree?

[00:03:04] Speaker 00:
The company did agree to that, but at that point, it brought the same impasse to fruition with the warehouse unit that it already existed for the over-the-road and the route sales.

[00:03:15] Speaker 00:
The impasse, however, became even more clear when during, after the November 14th session, the union

[00:03:22] Speaker 00:
failed to provide any additional bargaining dates for some time and did not indicate any particular willingness to be open to further compromise on specific issues.

[00:03:35] Speaker 00:
That's why this case is very similar to the case of TrueServe, where the employer, just as here, put the union on notice that it sought to address significant financial difficulties at the very outset of negotiations.

[00:03:46] Speaker 00:
Negotiations in that case occurred only over a six-week period, and at the end of which the employer informed the union that it would implement its final offer if it had not, if the last best and final offer was not accepted by the date that the current agreement expired.

[00:04:01] Speaker 00:
And this court overruled the board's finding of no interest.

[00:04:05] Speaker 04:
But you didn't say it in this case.

[00:04:07] Speaker 04:
You didn't say what the employer did in true service.

[00:04:12] Speaker 00:
The employer in TrueServe told, at the time, extended the final offer and explained to the union... Well, November 14th, you never said you were at impasse and your offer was the last final offer.

[00:04:28] Speaker 00:
On November 14th, there is evidence and testimony that the company asked the union to vote its offer.

[00:04:34] Speaker 00:
That is true, that the company did not utter the words last, best and final offer on the November 14th session.

[00:04:41] Speaker 00:
To the extent that a request to go vote on the proposal was not clear as a last, best and final offer.

[00:04:47] Speaker 00:
Of course not.

[00:04:49] Speaker 00:
Your Honor, the company would contend it became clear, if not on the 14th, then on the 15th, when Sharon Willie sent a letter to the union, hand-delivered, that the parties, that its last proposal was its last best and final, and requested the union to go vote.

[00:05:04] Speaker 04:
However, the — Yeah, but this request that the union vote is irrelevant.

[00:05:10] Speaker 04:
In fact, you can't even legally require that.

[00:05:12] Speaker 04:
That is true.

[00:05:13] Speaker 04:
You know that.

[00:05:14] Speaker 04:
So, in fact, if you were to insist on that to the point of impasse, that would be an unfair labor practice, too.

[00:05:22] Speaker 04:
You know that.

[00:05:23] Speaker 04:
So I don't understand why this request that the union vote on it is somehow translated into a last best final offer.

[00:05:33] Speaker 00:
Well, it is certainly not something that can be required, right, Your Honor.

[00:05:38] Speaker 00:
However, as in true serve, it can be a fact for consideration of whether an impasse exists if the union refuses to even submit a final offer submitted by the company for a vote.

[00:05:51] Speaker 00:
And that was a fact that this court considered in true serve.

[00:05:55] Speaker 00:
Again, in Laurel Bay, this court reversed the board's finding that the parties were not at impasse at the time of unilateral implementation.

[00:06:03] Speaker 00:
The parties in Laurel Bay, just as the parties here, were at loggerheads specifically over benefit fund increases, among other things.

[00:06:11] Speaker 00:
And just as in this case, neither party in Laurel Bay budged on its benefit plan position before the employer announced that it had already extended its last, best, and final offer.

[00:06:23] Speaker 04:
It's just out of curiosity.

[00:06:24] Speaker 04:
Was your firm representing the company through this process?

[00:06:29] Speaker 00:
During negotiations, no, Your Honor.

[00:06:31] Speaker 04:
You're somehow aware of that?

[00:06:33] Speaker 04:
I suspected that.

[00:06:35] Speaker 00:
Thank you, Your Honor.

[00:06:39] Speaker 04:
And I noticed that the Union brought in the Council to sit in.

[00:06:44] Speaker 00:
The Union did, during the last negotiation session of November 14th, bring in Council to sit in.

[00:06:51] Speaker 00:
And that Council admitted at the end of that session that the parties had not moved the ball very far.

[00:06:57] Speaker 00:
He also conveniently forgot his calendar and could not set additional dates.

[00:07:02] Speaker 00:
And the Union at no time

[00:07:04] Speaker 00:
between the final bargaining session and the date of implementation on November 19th, got back with the company on additional bargaining dates.

[00:07:12] Speaker 00:
There was no communication of that whatsoever until November 26th, at which time the implementation already happened and suddenly the union saw fit to perhaps become more flexible and propose a date of December 5th to meet again.

[00:07:26] Speaker 03:
Have the financial difficulties been clear at the time that the, I guess it's the union that proposed, started bargaining weeks after the company could have proposed it?

[00:07:41] Speaker 03:
Was the company's financial situation apparent at that time?

[00:07:47] Speaker 00:
When – when bargaining began, Your Honor?

[00:07:49] Speaker 00:
Yes.

[00:07:50] Speaker 00:
Yes, sir.

[00:07:51] Speaker 03:
As a matter of fact – So why the – why the slow motion at that stage?

[00:07:57] Speaker 00:
The slow motion of what?

[00:07:58] Speaker 03:
I'm sorry, Your – Of the company, in terms of getting negotiations going?

[00:08:02] Speaker 00:
Oh, it – I'm sorry.

[00:08:04] Speaker 03:
I misunderstood.

[00:08:05] Speaker 03:
I mean, you think it would be a persistent view?

[00:08:07] Speaker 00:
We've got to get this – Yes, Judge Williams.

[00:08:09] Speaker 00:
The company did propose that those parties start meeting in early August.

[00:08:15] Speaker 00:
However, to open it even further, in July, it was the union that first made reference that it wanted to amend the agreement, which it's usually the union's first move to do that.

[00:08:28] Speaker 01:
In early August, the company replied and suggested that it was mid-August and that you weren't ready to actually meet till the very end of August.

[00:08:35] Speaker 01:
Am I wrong on recalling the record that way?

[00:08:37] Speaker 00:
Your honor, that may be the case.

[00:08:39] Speaker 00:
That may be the case.

[00:08:40] Speaker 00:
I apologize.

[00:08:42] Speaker 00:
It wasn't August, and that same month the company was willing to meet.

[00:08:45] Speaker 00:
The union could not meet until September.

[00:08:48] Speaker 00:
And again, there were several sets of negotiations.

[00:08:51] Speaker 00:
The route sales negotiations, they were not available to meet, they said, until October 10.

[00:08:58] Speaker 00:
Mike Sells entered the 2012.

[00:09:01] Speaker 00:
Your honors, I see I need to save some of my time for rebuttal.

[00:09:04] Speaker 00:
We'll give you a couple minutes.

[00:09:04] Speaker 00:
Go ahead.

[00:09:05] Speaker 00:
Thank you.

[00:09:06] Speaker 00:
Mike Sells entered the 2012 negotiations with a four-year loss of over $5.5 million.

[00:09:12] Speaker 00:
It had already been forced to shut down several distribution centers and eliminate half the bargaining unit.

[00:09:17] Speaker 00:
This information was known and volunteered to the union at the outset of negotiations in all three groups.

[00:09:23] Speaker 01:
What was the default?

[00:09:24] Speaker 01:
So do I understand the record correctly that when November

[00:09:28] Speaker 01:
16th or 19th came and the prior collective bargaining agreement expired, that the agreement itself provided that the terms would actually continue until you had a new replacement agreement, or obviously impasse.

[00:09:45] Speaker 01:
Is that correct?

[00:09:46] Speaker 01:
You had agreed to keep adhering to this even if you hadn't negotiated a new agreement by the time it expired.

[00:09:53] Speaker 01:
We would take the position that an impasse would accept that.

[00:09:56] Speaker 01:
But then the question becomes whether you wanted out of this thing, you didn't want to uphold your commitment for even a day to continue the terms of the prior collective bargaining agreement, and so you had every incentive to declare an impasse at the first opportunity.

[00:10:11] Speaker 00:
Well, we would take

[00:10:14] Speaker 00:
Objection to that, the board upheld ALJ's decision without regard to the finding of any sort of artificial deadline.

[00:10:20] Speaker 01:
And so we would first contend that this court, if it were to hold... I know you spend a lot of time in your briefs talking about the union dragging its heels, and it occurs to me that there are actually incentives on both sides.

[00:10:31] Speaker 01:
You were in a hurry to get out of your agreement, even though you promised that you would adhere to those terms while good faith efforts in negotiating... Well, actually it wouldn't matter whether there was a provision in the contract

[00:10:44] Speaker 04:
continuing it because under the law you wouldn't be capable of changing the terms of the contract and in any event without an impasse.

[00:10:54] Speaker 04:
That is correct.

[00:10:54] Speaker 04:
So I don't think that's of any legal significance.

[00:10:59] Speaker 00:
To address, I'm sorry, I see.

[00:11:01] Speaker 00:
That's okay.

[00:11:02] Speaker 00:
Thank you.

[00:11:02] Speaker 04:
But you did have every incentive, economically, of getting it out.

[00:11:06] Speaker 00:
Well, and to address that issue, it is true, the company did not have the luxury of delay.

[00:11:12] Speaker 00:
That's why at the very outset, it set forth its parameters and its major goals of changing the commission structure, but health care and pension were the biggies for the company with all three groups of employees.

[00:11:23] Speaker 00:
And the company provided financial information to the union up front,

[00:11:27] Speaker 04:
who took this information at face value and never questioned it, never asked for additional information, and at the same time... Well, you also had a big fight over this gross dinette on compensation, an unusual use of the word net.

[00:11:43] Speaker 04:
It took me a while to figure out what you were talking about.

[00:11:46] Speaker 00:
Yes, Your Honor.

[00:11:47] Speaker 00:
I know that that can be confusing, so we tried to explain it as best we could in our briefs.

[00:11:52] Speaker 00:
I'm happy to explain further.

[00:11:53] Speaker 04:
No, I think I understand it.

[00:11:55] Speaker 00:
But the last minute change from gross to net on the union's part did not avoid an impasse, because while the union accepted the concept of net commissions, this was only one of the three key issues where major concessions were needed.

[00:12:12] Speaker 01:
a pretty significant movement by the union on November 14th on one of the most difficultly contested issues in bargaining.

[00:12:20] Speaker 01:
So how on earth can we determine from that or determine that there was no substantial evidence for the board to see in that, in those events, that there was not an impasse on November 14th, 15th, 16th, whichever day you're picking?

[00:12:34] Speaker 00:
On the issue of changing from gross to net, that was a shift.

[00:12:41] Speaker 00:
However, there again were three key issues here.

[00:12:43] Speaker 00:
The union made absolutely no movement at all, still to date has not, on its health care.

[00:12:49] Speaker 01:
I know, but you can't have an impasse declared

[00:12:53] Speaker 01:
Yes, there are three contentious issues, but as long as you're still making progress on at least one of those, you're not at an impasse.

[00:13:01] Speaker 01:
Let's assume that the other two were just not moving at all.

[00:13:04] Speaker 01:
You're not at an impasse when you're moving on one.

[00:13:06] Speaker 04:
Unless you were to state that the other two issues are so important we don't even care about the close to net.

[00:13:12] Speaker 04:
We have to get relief on the health and pension.

[00:13:16] Speaker 04:
We have to have it now.

[00:13:17] Speaker 00:
The company did convey that very clearly.

[00:13:20] Speaker 04:
No, no, it didn't convey it very clearly.

[00:13:22] Speaker 04:
It didn't convey it very clearly on November 14th.

[00:13:24] Speaker 04:
That's the problem.

[00:13:26] Speaker 04:
In fact, you came back with a counteroffer on the Roastinette.

[00:13:30] Speaker 00:
That is true.

[00:13:31] Speaker 00:
They were trying to get an agreement.

[00:13:34] Speaker 04:
Well, that's the problem.

[00:13:36] Speaker 04:
Of course you're trying to get an agreement.

[00:13:37] Speaker 01:
Well, the goal here for the company... The union also made a new offer on health care.

[00:13:40] Speaker 01:
You made a new offer on pensions.

[00:13:41] Speaker 01:
It was a busy day on the 14th.

[00:13:43] Speaker 00:
It was a busy day, but the company had already moved as far as it was willing to move.

[00:13:48] Speaker 00:
And it sought to get the union to accept its last, best, and final offer.

[00:13:54] Speaker 00:
And that's why it wanted — the company never wanted an impasse.

[00:13:58] Speaker 00:
It wanted a contract.

[00:13:59] Speaker 04:
Well, wait a minute, wait a minute.

[00:14:01] Speaker 04:
In response to the union's shift from gross to net, you said, well, okay,

[00:14:10] Speaker 04:
We'll go to the 14.5% rather than the 15.

[00:14:15] Speaker 04:
And we'll give this only if the drivers end up with 3% more business.

[00:14:24] Speaker 04:
So they're coming in with one of the three issues, and you're responding with a counterproposal at that point.

[00:14:34] Speaker 00:
Yes, Your Honor.

[00:14:35] Speaker 00:
The company did come back with what was its last and best offer on that date.

[00:14:39] Speaker 04:
It didn't say it on the 14th.

[00:14:40] Speaker 00:
That is true.

[00:14:41] Speaker 00:
Those words were not uttered.

[00:14:42] Speaker 00:
But those words alone, Your Honor, as you know, are not the magic words that always create an impasse.

[00:14:47] Speaker 04:
No, that's true.

[00:14:48] Speaker 04:
But I can't.

[00:14:49] Speaker 04:
A fire with the union negotiator does, of course, and we know the union has an incentive to try to drag this out.

[00:14:55] Speaker 00:
Yes.

[00:14:55] Speaker 04:
But I wouldn't have thought at the end of the 14th that we were at impasse.

[00:15:00] Speaker 04:
That's the problem.

[00:15:02] Speaker 00:
And I believe that that is why the company followed up the very next day on its comment previously to go vote the proposal with the letter on November 15th.

[00:15:11] Speaker 04:
Do you understand, Counsel, that a go vote is not relevant at all?

[00:15:17] Speaker 04:
I understand.

[00:15:18] Speaker 04:
Well, I know we did say it as a factor, but a company can't even insist on that.

[00:15:23] Speaker 04:
And that's certainly not equivalent to suggesting it's a final offer.

[00:15:27] Speaker 00:
To the extent that was not clear, it was made clear the very next day.

[00:15:30] Speaker 00:
And the company sought to, again, meet with the union on several occasions.

[00:15:36] Speaker 00:
But the union sat on its hands and gave no response whatsoever.

[00:15:42] Speaker 00:
There was no indication that the union was further willing to compromise its position on a specific issue.

[00:15:49] Speaker 00:
And that's what has been found, for example, in Wayneview, on which the board heavily relies,

[00:15:55] Speaker 00:
The union, at the final bargaining session, softened its position on all three issues that were in contention for the employer.

[00:16:04] Speaker 00:
It asked the employer for additional dates.

[00:16:07] Speaker 00:
It provided its cell number for the employer and to two mediators, which, by the way, the union had invited in to help with the final session.

[00:16:15] Speaker 00:
And then later that day, the employer faxed a regressive proposal, which it suddenly termed its last, best, and final offer.

[00:16:22] Speaker 00:
And it refused to meet with the union further.

[00:16:25] Speaker 00:
And the employer then claimed impasse on a single issue, which led to a heightened burden of proof as to the impasse.

[00:16:33] Speaker 00:
There's also another case, I'm sorry, I see that I'm way over, Your Honor.

[00:16:40] Speaker 01:
I will give you a couple of minutes for rebuttal.

[00:16:43] Speaker 01:
You can wind up.

[00:16:48] Speaker 00:
With this said, Your Honor, and I have more to say about the cases cited by the Board.

[00:16:54] Speaker 04:
There was no expressed... I don't understand why you make a big deal about the ALJ.

[00:17:02] Speaker 04:
talking about the alleged post-impact discussion when the board, by its footnote, dispensed with that.

[00:17:10] Speaker 04:
Why are you making a point of it?

[00:17:12] Speaker 00:
Oh, I don't believe that I have an oral argument.

[00:17:14] Speaker 00:
In the briefs?

[00:17:15] Speaker 00:
In the briefs, we did that simply to reserve the argument and to make sure that the board did not plan to rely on it in its brief.

[00:17:24] Speaker 00:
It was a preemptive measure that, as we discussed in our reply, to the extent that

[00:17:30] Speaker 00:
that that is not an argument that the board is making, then we don't see that as an issue anymore.

[00:17:36] Speaker 00:
And for these reasons, the petition for review should be granted.

[00:17:40] Speaker 01:
Thank you.

[00:17:43] Speaker 01:
Mr. Jost?

[00:17:50] Speaker 01:
Did I say it right?

[00:17:51] Speaker 01:
Is it Jost or Jost?

[00:17:52] Speaker 04:
Jost.

[00:17:52] Speaker 01:
I apologize.

[00:17:53] Speaker 04:
You can raise that podium.

[00:17:59] Speaker ?:
Thank you.

[00:18:04] Speaker 06:
May it please the Court, my name is Micah Jost for the NLRB.

[00:18:07] Speaker 06:
I'd like to begin by addressing a few factual matters that were raised by opposing counsel.

[00:18:11] Speaker 06:
First of all, with regard to when the letters were exchanged initially, the union did indeed send its letter on July 2nd.

[00:18:20] Speaker 06:
The company responded August 13.

[00:18:22] Speaker 06:
Those letters can be found at Joint Appendix 81 and 83.

[00:18:26] Speaker 06:
the employer at that time proposed meeting dates at the end of August and September.

[00:18:30] Speaker 01:
Is it right that it took the union 10 days to get back with a new negotiating date?

[00:18:36] Speaker 01:
I guess 12 days after the 14th?

[00:18:38] Speaker 06:
Given the sort of, oh you mean in November you're on it?

[00:18:40] Speaker 01:
Yes, between November.

[00:18:41] Speaker 01:
She says November 14th, November 20th.

[00:18:43] Speaker 01:
They didn't get a response until the 26th.

[00:18:45] Speaker 06:
That's not the credited evidence, your honor.

[00:18:47] Speaker 04:
I'm sorry, I can't hear you, counsel.

[00:18:48] Speaker 06:
I apologize.

[00:18:49] Speaker 06:
Joint appendix 747, which is the ALJ's decision, the ALJ notes that the union, in fact, responded with a date of

[00:19:00] Speaker 06:
proposing an earlier date, November 27, and that response was provided within days of the supposed final offer.

[00:19:07] Speaker 01:
What day was that response provided by the union?

[00:19:09] Speaker 06:
It's not clear what the exact date was, but at Joint Appendix 435, the union states that it was the day after or the day after that, so around the 15th or the 16th, around the same time that the company was claiming that the parties were at impasse.

[00:19:23] Speaker 04:
Counsel, how do you distinguish true serve and moral bank?

[00:19:29] Speaker 04:
Those are our recent cases.

[00:19:31] Speaker 04:
They go pretty far in rejecting the board's conclusions on impasse.

[00:19:39] Speaker 06:
Your Honor, our primary response to true serve would be that these are fact-dependent cases in all instances.

[00:19:46] Speaker 04:
Yes, well, you know what, they try to come out with principles.

[00:19:50] Speaker 04:
Yes, Your Honor.

[00:19:51] Speaker 04:
It's not sufficient to say they're just fact-dependent cases.

[00:19:54] Speaker 06:
Right.

[00:19:55] Speaker 06:
And True Serve, Your Honor, does not disturb the basic principle which the Court recognized after True Serve in the Wayneview case in particular.

[00:20:03] Speaker 06:
And that principle is that where the parties have made major shifts in their positions that have opened up new grounds for further bargaining, they're entitled to an opportunity to exhaust those further possibilities in light of the new changes.

[00:20:15] Speaker 04:
So you think that was not true in True Serve or in Loyal Bay?

[00:20:20] Speaker 06:
In Laurel Bay, Your Honor, the parties had been deadlocked from the outset.

[00:20:23] Speaker 06:
The union had said that its position was not negotiable on health care.

[00:20:28] Speaker 06:
The court found that the parties had been at loggerheads for six months.

[00:20:32] Speaker 06:
So that case is clearly distinguishable in whatever regard.

[00:20:34] Speaker 04:
What about the other one?

[00:20:35] Speaker 06:
In true serve, Your Honor, the parties were still moving near the end, but from the outset, the company had made very clear that it was only going to make one final offer, and when it did make that final offer, it was crystal clear about the finality of it.

[00:20:48] Speaker 06:
In this case, well, in true serve, then,

[00:20:52] Speaker 06:
The union tried to come back after that and make these empty protestations of flexibility, and that's what we do not have in this case.

[00:20:58] Speaker 06:
What we have instead is the parties making fundamental shifts in their basic approach to bargaining.

[00:21:03] Speaker 04:
On November 14th?

[00:21:04] Speaker 06:
On November 14th, Your Honor, the union made a basic shift, a fundamental change in its approach to the bargaining, which is the exact criteria that the court looked for in Wayneview, where the union shifted

[00:21:15] Speaker 06:
And this was the quintessential sort of back and forth between the parties that characterizes good faith, productive bargaining.

[00:21:21] Speaker 06:
On that day, they started out talking about one-year agreements.

[00:21:26] Speaker 06:
The company began by making an increase in the net percentage it was willing to pay for a one-year agreement.

[00:21:33] Speaker 06:
And that spurred a response from the union after the company made clear, we absolutely need net.

[00:21:40] Speaker 06:
The union acted in response to that, and that's again similar to what we have in Wayneview, where the parties are listening to each other and are acting in a way that addresses the other party's concerns and then opens up new... The company's got some real concerns, though, that the union was deliberately dragging its feet.

[00:21:57] Speaker 01:
Time is on its side.

[00:21:59] Speaker 01:
It gets to keep these terms as long as the negotiations keep going.

[00:22:03] Speaker 01:
How are we supposed to... How did the board

[00:22:07] Speaker 01:
assuage that concern.

[00:22:08] Speaker 06:
Your Honor, first of all, as it was noted earlier, both sides have incentives here.

[00:22:12] Speaker 06:
The company's incentive is to rush to impasse.

[00:22:14] Speaker 06:
The union's incentive would be to drag it out.

[00:22:16] Speaker 06:
The question is, what does the objective evidence show about what those incentives led the parties to do?

[00:22:20] Speaker 01:
The union gets the default rule.

[00:22:23] Speaker 06:
But the company also has the ultimate advantage in terms of being able to put its terms in effect at some point.

[00:22:29] Speaker 04:
Does it make any difference?

[00:22:30] Speaker 04:
Has the board considered at all

[00:22:32] Speaker 04:
that the situation can be different when the company is faced with financial difficulties, which of course they disclosed, they gave their books to the Indian.

[00:22:46] Speaker 04:
And does it make a difference when a company is financially in a difficult position and is seeking a reduction in the compensation, whether it's wages, pension, or health benefit, as compared to the original scenario for the impasse rule, which was a context when employers and unions were always bargaining for increases.

[00:23:16] Speaker 04:
So there's a different world today, partly because of pension and health costs, which changes the incentives, because the original notion of an employer having the right to put in his last best offer was designed to give the employer a weapon, vis-a-vis the union.

[00:23:39] Speaker 04:
This is not that kind of situation.

[00:23:41] Speaker 04:
The employer's not looking for a weapon, he's looking for survival.

[00:23:44] Speaker 06:
Your Honor, I have two points in response to that.

[00:23:46] Speaker 06:
The first is that the law does recognize an exception to the impasse doctrine for exigent circumstances.

[00:23:53] Speaker 06:
When there are substantial business justifications that require the employer to act immediately, then yes, the employer does have the flexibility to do that.

[00:24:02] Speaker 04:
Well, why wasn't that a factor to be considered after all the employer had to just recently laid off 30 root drivers?

[00:24:09] Speaker 06:
That's right, Your Honor, and by doing so, it had opened up future cost savings to itself.

[00:24:13] Speaker 04:
At that rate, it could eliminate all its employees and save a lot of costs.

[00:24:19] Speaker 06:
Your Honor, it has the right to do that.

[00:24:22] Speaker 01:
They didn't invoke this exception, did they?

[00:24:26] Speaker 01:
That's exactly right.

[00:24:27] Speaker 06:
This is an exception that doesn't come into play here.

[00:24:30] Speaker 06:
employers' delay in actually initiating the bargaining demonstrates that it was not actually under the sort of exigencies that it claimed.

[00:24:38] Speaker 06:
The second point, Your Honor, is that the parties still retain other weapons.

[00:24:42] Speaker 06:
Even if the employer was not entitled to implement unilaterally, it still could have engaged in a lockout.

[00:24:48] Speaker 06:
The union could have engaged in a strike.

[00:24:50] Speaker 06:
The parties still have the ability to bring pressure to bear on the other side if they feel that the other side is not being

[00:24:57] Speaker 06:
sufficiently conciliatory.

[00:25:01] Speaker 04:
The fact that I'd like to focus on... I was rather amused to see in today's paper that the union's suggestion that the company move to the Central States pension.

[00:25:12] Speaker 04:
I don't know if anybody read the paper today, but Central States has just indicated that it's going to have to reduce the pensions for existing pensioners because

[00:25:22] Speaker 04:
their funds are not adequate to deal with pensions.

[00:25:28] Speaker 04:
In hindsight, that would not have been a very

[00:25:32] Speaker 06:
I understand that Central States is in dire straits based on the current news.

[00:25:36] Speaker 01:
It's not just hindsight.

[00:25:37] Speaker 01:
The employer was already worried at the time of negotiations that Central States was going to make things worse.

[00:25:41] Speaker 01:
That's right.

[00:25:41] Speaker 06:
And the parties have continued to be with Central States.

[00:25:44] Speaker 06:
The question was only about who would be paying what.

[00:25:47] Speaker 06:
And the critical fact for the court's consideration is that at that last route sales meeting on November 14th,

[00:25:53] Speaker 06:
the company dropped significantly from its initial request that the employees pay $91.10, which was half, all the way down to $13.50.

[00:26:02] Speaker 06:
So for them to claim that there was no movement going on is not reflected by the record.

[00:26:06] Speaker 06:
The momentum that the parties had from these back and forths was only stopped by, or paused rather, by the fact that the parties had to get to bed.

[00:26:13] Speaker 01:
Why wasn't there an impasse on February 13th?

[00:26:17] Speaker 01:
Pensions had to be resolved.

[00:26:19] Speaker 01:
There had been no new pension proposal, as I understand it, since November 19th.

[00:26:24] Speaker 01:
You had a strike vote about 10 days after the 13th.

[00:26:30] Speaker 01:
Why isn't that?

[00:26:32] Speaker 01:
when the impasse happened?

[00:26:34] Speaker 06:
Your Honor, it does appear that the company, as sort of an afterthought, argues that there was some sort of subsequent delay, or excuse me, subsequent impasse.

[00:26:43] Speaker 06:
And as the board noted in the final footnote, first of all, the company did not meet the legal standards that are set forth in the dependable maintenance case by actually telling the union

[00:26:54] Speaker 06:
We believe that even if we weren't at impasse before, now we are.

[00:26:57] Speaker 01:
Well, they'd already told them in November they thought they were at impasse.

[00:26:59] Speaker 01:
And they weren't, Your Honor.

[00:27:01] Speaker 06:
That was a violation of the law for them to impose their terms at that time when they, in fact, were not at impasse.

[00:27:05] Speaker 01:
The union already knew that they thought they were at impasse.

[00:27:08] Speaker 01:
Well, the company claimed that, but the... No, but the union had already been told by the company that, from the company's viewpoint, they were at an impasse.

[00:27:15] Speaker 01:
So I don't know why we have to say it again.

[00:27:18] Speaker 01:
The key, though, is... You've got a strike vote.

[00:27:19] Speaker 01:
You've got no movement on pensions unless you're aware of something since November.

[00:27:23] Speaker 06:
Your Honor, as far as I know, the parties set pensions aside, but they continue to make progress on both health care and... Yeah, but you're not going to have an agreement if you don't resolve pensions.

[00:27:31] Speaker 01:
You have to have pensions to have an agreement.

[00:27:33] Speaker 06:
Your Honor, these are fungible money issues.

[00:27:36] Speaker 06:
This is, as in the Grinnell case, this is a matter of dollars.

[00:27:39] Speaker 06:
The money that the union was proposing to add to its health care offer is money that the company could have just as well put towards the pensions.

[00:27:46] Speaker 06:
The fact is that the negotiations were still in flux and there's no sort of indication, the standard has set forth in

[00:27:54] Speaker 06:
in Wayneview is that for a single issue to cause a deadlock overall, it has to lead to a breakdown of negotiations.

[00:28:00] Speaker 06:
That's not what we have here.

[00:28:02] Speaker 01:
To the extent that the parties... Why wasn't there a breakdown by mid-February?

[00:28:05] Speaker 06:
The parties were still moving.

[00:28:07] Speaker 01:
The record shows... You had a strike vote.

[00:28:08] Speaker 01:
What is the significance of the strike vote?

[00:28:11] Speaker 06:
A strike vote, I believe, could be one of the factors that could be considered here.

[00:28:15] Speaker 01:
Isn't it pretty powerful evidence that they were resorting to alternative means?

[00:28:19] Speaker 01:
Or, you know, the...

[00:28:21] Speaker 01:
very, very weighty pressure.

[00:28:23] Speaker 01:
They're going to a whole new level of pressure against the employer.

[00:28:25] Speaker 06:
Your Honor, the possibility of a strike is always on the table.

[00:28:28] Speaker 06:
The fact that the union considered a strike, it did not ultimately announce a strike.

[00:28:32] Speaker 06:
It never took strike action.

[00:28:35] Speaker 06:
So the fact that the union was contemplating that internally doesn't weigh heavily in the analysis here.

[00:28:40] Speaker 01:
Did the board explain all that?

[00:28:42] Speaker 06:
The board's analysis is relatively brief, as is the argument that the company makes on this point.

[00:28:48] Speaker 06:
Again, it's essentially an afterthought.

[00:28:52] Speaker 01:
I don't know that it's our job to characterize things as afterthought just because they aren't Roman numeral one or two in a brief.

[00:28:58] Speaker 01:
But they have a few powerful points here.

[00:29:02] Speaker 01:
And there's not, as you said, a whole lot of response from the board.

[00:29:05] Speaker 06:
The points that I would note, Your Honor, are continued improvement in the Union's commission offer on January 22nd.

[00:29:11] Speaker 06:
Would you speak a little louder, please?

[00:29:13] Speaker 06:
Excuse me, Your Honor.

[00:29:14] Speaker 06:
I would point to the continued improvement in the Union's commission offer, which is at Joint Appendix 314.

[00:29:19] Speaker 06:
On February 13, you have the employer changing its offer on non-manufactured products so the parties are able to reach a tentative agreement at 9.5%, which is at Joint Appendix 194.

[00:29:32] Speaker 06:
And on February 27, you have the union for the first time embracing the idea that the future increases from 14.5% to 15%.

[00:29:44] Speaker 06:
you have the union embracing the idea that it would in fact take a percentage of increases in sales to make that happen.

[00:29:52] Speaker 06:
So you have the union on February 27 going to 1%, then 1.5%, on March 28th, 1.75%, and the parties bring in a mediator at the company's request.

[00:30:03] Speaker 06:
So at that time, the parties, the factors that we've laid out make clear that the parties were indeed still making movement at that time.

[00:30:13] Speaker 06:
The final point that I'd like to emphasize is the contemporaneous understanding of the parties on November 14.

[00:30:18] Speaker 06:
As was noted, the parties did not say that anything was final.

[00:30:22] Speaker 06:
Willie, in fact, testified that she still hoped to reach an agreement.

[00:30:25] Speaker 06:
That's at Joint Appendix 705.

[00:30:26] Speaker 06:
And the very next day, when the parties met in the warehouse negotiations, they did indeed agree that they would try to resolve the issues from the warehouse, excuse me, from the sales negotiations there.

[00:30:40] Speaker 06:
So, for those reasons, we would ask the court to enforce the board's order in full.

[00:30:45] Speaker 01:
Thank you.

[00:30:48] Speaker 01:
Ms.

[00:30:48] Speaker 01:
Hasbrook will give you two minutes.

[00:30:57] Speaker 00:
Judge Silberman, Your Honors, made a great point that there is a difference when an employer comes into negotiations seeking concessions.

[00:31:07] Speaker 00:
It cannot be treated like another situation because at the time that the employer was seeking concessions, it voluntarily provided a great deal of financial information to the union, which was not questioned.

[00:31:17] Speaker 00:
And at the same time, it's undisputed that the union entered negotiations seeking to restore wages and benefits that it felt were lost in the past.

[00:31:26] Speaker 00:
And when the union recognized the company's need to cut costs, it sought to avoid the concessions that would inevitably come with a new contract.

[00:31:34] Speaker 00:
The Union also, however, wanted to avoid the appearance of impasse, which could either result in a lockout or unilateral implementation.

[00:31:42] Speaker 00:
And the best way for the Union to achieve this delicate balance was to extend negotiations as long as possible.

[00:31:48] Speaker 02:
Yeah, but it has to successfully avoid impasse.

[00:31:52] Speaker 02:
It has to make concessions, which it did.

[00:31:55] Speaker 00:
It did make a concession on November 14th with regard to the commissions.

[00:32:01] Speaker 00:
Again, Judge Williams, there were two additional key issues, one being pensions, where the union never and to date has not changed its position that the company pay the... But you didn't say, if we don't get relief on pensions and health, we cannot continue this.

[00:32:19] Speaker 04:
agreement.

[00:32:20] Speaker 04:
You never said that.

[00:32:21] Speaker 00:
That specifically was not said.

[00:32:23] Speaker 00:
Throughout negotiations, though, the company did emphasize, and I do believe that there are record citations, that it had to have relief in three areas.

[00:32:31] Speaker 00:
One was pensions, one was health care, and one was commissions for the route sales.

[00:32:35] Speaker 00:
The health care, too.

[00:32:37] Speaker 00:
The union had never, ever entertained the idea of allowing the company to have flexibility in its plan and to exclude covering retirees.

[00:32:46] Speaker 00:
Those issues left the healthcare deadlocked, despite the fact that the union raised an issue or a proposal regarding a central state's plan, which the company explained would cost 20% more to the company than what the company was already proposing.

[00:33:04] Speaker 00:
For these reasons, Your Honors, I appreciate your time, and we would ask that the company's petition for review be granted and that the board's petition for enforcement be denied.

[00:33:13] Speaker 01:
Thank you.

[00:33:14] Speaker 01:
The case is submitted.

[00:33:15] Speaker 01:
We're going to take a very brief recess before the second case.