[00:00:04] Speaker 04: Case number 19-1174 et al. [00:00:07] Speaker 04: Bob's Tire Co. [00:00:08] Speaker 04: Inc. [00:00:08] Speaker 04: Petitioner versus National Labor Relations Board. [00:00:12] Speaker 04: Mr. Coldis for the petitioner, Mr. Seed for the respondent. [00:00:17] Speaker 02: Good morning, Mr. Coldis. [00:00:18] Speaker 02: We'll hear from you. [00:00:20] Speaker 01: Good morning, Your Honor. [00:00:21] Speaker 01: Thank you. [00:00:21] Speaker 01: May it please the court. [00:00:23] Speaker 01: My name is Gregory Coldis. [00:00:25] Speaker 01: I'm here on behalf of the petitioner, Bob's Tire Company. [00:00:29] Speaker 01: This is a petition for review of the decision in order of the National Labor Relations Board. [00:00:33] Speaker 01: that Bob's violated sections 8A5 and 8A1 of the Act in failing to notify and bargain with the union before subcontracting bargaining unit work and before terminating a performance-based bonus program. [00:00:50] Speaker 01: Initially, I'd like to start with the issue of whether Bob's subcontracted bargaining unit work to a non-bargaining unit employee, and it would be our position that, in fact, he did not or it did not. [00:01:04] Speaker 01: Bob's was an entire recycling business, and involved in that business was taking old tires and either calling them out and determining whether they were reusable for retail sale. [00:01:17] Speaker 01: If not, they could potentially be sold elsewhere for recapping. [00:01:22] Speaker 01: And the third use would be to chip them to create what's called tire-derived fuel. [00:01:28] Speaker 01: In 2015, [00:01:30] Speaker 01: the market for tire-derived fuel basically disappeared. [00:01:35] Speaker 01: And it was going to be costing, it costs more to process the chips and to ship them to a customer than the customers were willing to pay. [00:01:44] Speaker 01: Bob's had a substantial pile of these chips piling up at his location, which also created a problem. [00:01:52] Speaker 01: And there are tires coming in constantly, day after day, [00:01:57] Speaker 01: that you have to do something with to find some place to put them. [00:02:01] Speaker 01: And if they're not chipped, you have to do something else with them. [00:02:06] Speaker 01: Bob's at that point determined to change the nature of his business, to change the direction of his business [00:02:13] Speaker 01: by creating a new product and finding a market for it with regard to treating those tires so that he could process those tires, get them off of the yard, and continue to be somewhat profitable as a business. [00:02:28] Speaker 01: He had some economic difficulties during that period of time. [00:02:31] Speaker 01: And again, the chip market that disappeared was a substantial portion of the business. [00:02:37] Speaker 01: the inability to make any profit on the sale of those, and in fact, they were generating a loss, caused Bob to shift away from that. [00:02:48] Speaker 00: You're arguing the record as if we're going to make initial determinations of fact. [00:02:53] Speaker 00: If we find that the board's conclusions with respect to this matter, supported by substantial evidence, that's the end of it. [00:03:01] Speaker 01: I would agree, Your Honor, and the board's given... And substantial evidence is not a weighty [00:03:07] Speaker 00: standard of review and the board certainly had plenty of evidence. [00:03:12] Speaker 00: ALJ and the board had plenty of evidence to support their conclusion. [00:03:16] Speaker 00: There was no change in direction. [00:03:18] Speaker 00: This was work done by bargaining unit employees. [00:03:21] Speaker 00: No different than what employers frequently do when they see one piece of the operation going up or down. [00:03:27] Speaker 00: They may make adjustments and that's essentially the finding of the board. [00:03:32] Speaker 00: Honestly, I'll tell you my view of the record is [00:03:35] Speaker 00: I don't know how I could find under a substantial evidence test that that's wrong. [00:03:42] Speaker 01: I agree, Ron. [00:03:42] Speaker 00: That's the standard of review. [00:03:43] Speaker 00: I'm not doing what the ALJ. [00:03:45] Speaker 00: We're not here to try the case. [00:03:48] Speaker 00: You're not here to give testimony. [00:03:49] Speaker 00: We're looking to see what is it about the board's findings, fail substantial evidence review, and I don't know what it is. [00:03:58] Speaker 01: At this point, Your Honor, I was just trying to provide some background for the court, but I agree with you, Your Honor, that in fact, that is the standard of review and that the court's going to provide or going to grant the substantial deference to the ALJ and the NLRB's determination with regard to that. [00:04:14] Speaker 01: I think the record does have evidence in it, certainly that reflects that Bob said acquired new equipment to take on this new venture. [00:04:24] Speaker 01: and had a new market for it and was creating a new product. [00:04:29] Speaker 01: at that. [00:04:31] Speaker 05: Mr. Polis, under the board's precedence and under the precedence of the Supreme Court, does the board have to find that there was a substitution or replacement of existing workers before finding that subcontracting is a mandatory subject for bargaining? [00:04:52] Speaker 05: So is substitution and replacement of workers a predicate for the legal finding? [00:04:59] Speaker 01: I would say at this point under the board's cases, particularly the Acme case, that substitution and replacement was not a requirement to find a violation here. [00:05:13] Speaker 01: We would argue that certainly there was no substitution or replacement. [00:05:17] Speaker 01: There was no loss of job. [00:05:18] Speaker 01: There was no loss of [00:05:20] Speaker 01: of overtime time there was no evidence of any indication that that any employee lost anything as a result of this any unit employee so i would suggest that that under the board's case law that yes there is no requirement for replacement under the [00:05:43] Speaker 01: court case law, the court seemed to still address issues of replacing unit employees. [00:05:51] Speaker 01: So we would, and I don't know if this court has ever reviewed the ACME decision or a similar decision. [00:06:00] Speaker 01: Certainly the First Circuit has, and it's upheld it. [00:06:03] Speaker 01: And again, that goes back to the standard of whether or not the board [00:06:09] Speaker 01: acted reasonably in that determination in interpreting the statute in that fashion. [00:06:16] Speaker 02: If the board found that most all of the work done by the subcontractor was work that was also done by unit employees, [00:06:35] Speaker 02: Isn't that necessarily a finding that they're substituting the subcontractor for unit employees because if the issue was capacity and there weren't enough unit employees to get all the work done, then what you can do is just hire more unit employees, right? [00:06:57] Speaker 01: That's correct. [00:06:58] Speaker 01: And the board, I think, found that there was a substantial overlap in terms of work and some of the work that was done by masses employees here that included some work that was previously done by by BJs, the other temp agency that provided employees that there was some overlap of that work. [00:07:18] Speaker 01: But again, none of those employees from BJs that were there lost anything as a result of that of that change. [00:07:26] Speaker 01: And the testimony in the record indicates that there was an inability for BJs to supply any additional employees. [00:07:34] Speaker 00: So yes, the response- You're talking about a compliance issue. [00:07:37] Speaker 00: That's not something we're going to decide now. [00:07:40] Speaker 00: You have in your mind the question whether or not there were any losses that can be recovered. [00:07:48] Speaker 00: I mean, that's a matter not before us. [00:07:51] Speaker 00: Assuming ACME is right, and we have never rejected ACME, [00:07:55] Speaker 00: assuming acne is right, that's really kind of the end of the inquiry. [00:08:00] Speaker 00: You don't have to show replacement or displacement, I'm sorry, and whether or not what happens in a compliance proceeding remains to be seen. [00:08:12] Speaker 01: I understand that, Your Honor, but I think that ignores the impact [00:08:17] Speaker 01: at financial impact and financial effects on an employer for having to go through a compliance hearing, if in fact the compliance hearing not otherwise be merited based on. [00:08:27] Speaker 00: Surely you're not. [00:08:28] Speaker 00: You're saying that cheek and tongue and cheek. [00:08:33] Speaker 00: I mean, we don't credit that kind of an argument in many realms at all. [00:08:38] Speaker 00: That is that you have to follow the proceedings and there may be some costs and inconveniences in going through it. [00:08:45] Speaker 00: I mean, the question is whether or not you violated the law. [00:08:47] Speaker 00: Now the next step and possible protection for you is a compliance proceeding. [00:08:52] Speaker 00: It's kind of a strange argument to say, but that'll cost us time and money to go through the compliance proceeding. [00:09:00] Speaker 01: I see that I'm into my rebuttal time. [00:09:02] Speaker 01: I would like to address one other issue, and that is the fact that the masses employees in this case were in fact, should be in fact considered to be Bob's employees. [00:09:14] Speaker 01: because Bob's would be a joint employer of those employees under the current rule from the NLRB in terms of determining joint employment. [00:09:26] Speaker 01: And if in fact they are joint employees and considered Bob's employees for purposes of the act, then there really was no subcontracting of work out to employees other than employees that are Bob's employees. [00:09:41] Speaker 01: And Bob's employees are contained in the unit. [00:09:43] Speaker 00: Now, you understand that this alternative argument is perfectly inconsistent with your principal argument. [00:09:50] Speaker 00: Now, I know you can make inconsistent arguments. [00:09:52] Speaker 00: I understand that, but this is perfectly inconsistent. [00:09:56] Speaker 01: I understand that it's an alternative argument. [00:09:58] Speaker 00: Let me ask the question this way. [00:10:00] Speaker 00: I know you're trying not to smile, but it is perfectly inconsistent. [00:10:04] Speaker 00: Which one do you want us to go with? [00:10:07] Speaker 00: Because they're completely inconsistent arguments. [00:10:09] Speaker 00: You want us to go with your primary argument? [00:10:12] Speaker 00: Or would you rather we go with the perfectly inconsistent alternative argument? [00:10:18] Speaker 01: I think that our position would be that if the court is inclined to say, yes, those employees, that this was an unlawful subcontracting of employment to non-unit employees, that I would ask them that the court consider the alternative argument to say that, well, are they really non-unit employees if, in fact, they're Bob's employees or considered to be Bob's employees? [00:10:39] Speaker 01: And I would think that if the situation were reversed, [00:10:43] Speaker 01: and Bob's was trying to take a position, hey, these were not our employees, the NLRB would be coming in to say, yes, they are, under both case law and our recently adopted rule back in February of this year, where the evidence shows that you've had control over them, you've supervised them, you control their hours, you control how they work. [00:11:03] Speaker 01: It isn't, in fact, an alternative argument that we're making and it's [00:11:08] Speaker 00: And the ALJ, as you acknowledge, in your exception, the ALJ made findings to the contrary, and the board adopted the ALJ's findings. [00:11:18] Speaker 00: Again, the substantial evidence is against you. [00:11:21] Speaker 01: I don't know if the ALJ adopted or made any finding with regard to the weather. [00:11:26] Speaker 01: Well, I guess he did. [00:11:27] Speaker 00: I'm sorry. [00:11:27] Speaker 00: He did, because you specifically objected to it. [00:11:30] Speaker 01: He did, but the decision was based solely on the reading. [00:11:34] Speaker 01: As I understand, it was based solely on the reading of the contract. [00:11:37] Speaker 01: with NASA's and to say that NASA says that they were not Bob's employees and it was kind of a conclusion that therefore they're not Bob's employees and I would argue that the analysis doesn't stop with a contract and it certainly wouldn't in any other circumstance involving these types of issues. [00:11:55] Speaker 01: The question would be and under the NLRB's rule the question would be [00:11:59] Speaker 01: Did you supervise them? [00:12:01] Speaker 01: Did you have authority over their hiring and firing? [00:12:04] Speaker 01: All the other aspects that are listed in that recent rule. [00:12:10] Speaker 02: Judge Rao, any further questions? [00:12:12] Speaker 05: No. [00:12:13] Speaker 05: Thank you. [00:12:13] Speaker 02: All right. [00:12:14] Speaker 02: We'll give you some time on rebuttal, Mr. Coldis, and we'll hear now from Mr. Sayed. [00:12:21] Speaker 02: Thank you, Ron. [00:12:23] Speaker 03: Good morning, Your Honor. [00:12:24] Speaker 03: May it please the Court, David Seid, for the Labor Board. [00:12:27] Speaker 03: Two initial points. [00:12:29] Speaker 03: First, the record amply supports the Board's finding that there was no fundamental change in the nature of the company's business when it subcontracted to masses. [00:12:39] Speaker 03: To the contrary, there is ample evidence, according to the board's finding, that there was significant overlap in the work basically remained the same, loading and unloading tires, running the tires through some machines. [00:12:52] Speaker 03: The company points to the so-called new business that it was involved with, yet the record shows that out of the 111 massive subcontracting employees, only four of them exclusively perform that work. [00:13:05] Speaker 03: And it's an undisputed finding by the board. [00:13:08] Speaker 03: Secondly, with respect to the question that was asked about whether or not there needs to be any adverse impact. [00:13:15] Speaker 03: First, from a factual standpoint, I do want to emphasize that the board did find that there was at least some evidence of some layoffs and also did specifically find that it's very possible that there could have been increased opportunities for overtime. [00:13:28] Speaker 03: Putting aside from a factual standpoint, from a legal standpoint, there are numerous cases cited in the board's brief [00:13:34] Speaker 03: I believe at page 22, where the board with court approval, though not specifically this court, have recognized that there does not need to be a loss of jobs in order for the subcontracting without bargaining to be unlawful. [00:13:49] Speaker 03: And that principle applies very well here. [00:13:52] Speaker 03: And particularly where this was a new union that had only been certified for approximately one month when the subcontracting began. [00:14:01] Speaker 05: Mr. site. [00:14:02] Speaker 05: Can you cite two cases, though I know there are a number of cases suggesting that you don't need to have substitution or replacement, but it seems that in fact most of the board's cases do involve substitution or replacement when they find that subcontracting must be a mandatory subject of bargaining. [00:14:21] Speaker 03: It's correct, Your Honor. [00:14:22] Speaker 03: There are many cases where that might be the case, but there are also many cases where it isn't. [00:14:26] Speaker 03: And again, I would direct the court to page 22 of the board's brief, where the board cites at least three or four different cases, in particular the Society Espinola case in the First Circuit that enforced the board decision, where the court did explain there are opportunities for an employer to hire [00:14:45] Speaker 03: additional employees into the unit. [00:14:47] Speaker 03: In fact, the company has even acknowledged it could have hired employees into the unit, but it simply didn't want to. [00:14:53] Speaker 03: Well, that's not an excuse not to at least bargain with the union and see where things might go. [00:14:59] Speaker 03: So I would suggest that there is significant board law with at least one circuit approving, if not two, I think the seventh circuit also recognizing that there does not need to be a specific loss of jobs or even any specific adverse consequence to employees. [00:15:15] Speaker 05: And if you could maybe expand a little bit on what same work seems to me, because even in that, even in the case that you just mentioned, I think same work often means doing the identical work. [00:15:28] Speaker 05: You know, you're hiring subcontractors to do the same work. [00:15:31] Speaker 05: So in this case, at least arguably, it's a similar type of work. [00:15:35] Speaker 05: But it's, you know, Bob's Tires has arguably expanded the amount of work it's doing, right? [00:15:41] Speaker 05: They have a new contract. [00:15:42] Speaker 05: They've, you know, they've bought new machinery. [00:15:47] Speaker 05: So it's not having workers, you know, hiring new workers to do the existing work, but to do new work. [00:15:54] Speaker 05: So is that a distinction with some of the other cases by the board? [00:15:58] Speaker 05: Can you cite a case that has similar facts where there's been an expansion of the scope of work and that expansion has been covered by subcontractors? [00:16:07] Speaker 03: Your Honor, the board in this case very reasonably analogize this case to a situation where there's a successorship and a substantial continuity of the business to determine that a change in customers or an addition of some equipment is not a substantial change in the nature of the business. [00:16:24] Speaker 03: But again, even if this court were to disagree with that well-reasoned board interpretation and analysis, [00:16:30] Speaker 03: I can't overemphasize that out of the 111 subcontracted employees, it is undisputed before this court that only four of them exclusively performed this new work. [00:16:43] Speaker 03: The rest of them, 107, were doing the exact same work as the company's employees, loading and unloading tires, doing whatever other work might have been required around the yard. [00:16:54] Speaker 03: So they are doing the identical work. [00:16:58] Speaker 03: regardless of, again, even if this court should consider the cutting of truck tires different than the cutting of car tires, because I believe one of the new machines involved the cutting of truck tires, which might have been new, but it's still cutting tires. [00:17:09] Speaker 03: So the board would argue in the first place, it is the same work. [00:17:12] Speaker 03: And even if this court would disagree, the vast majority of almost all of the subcontracted employees were still performing the exact same work. [00:17:23] Speaker 00: And implicit in their argument, or you're not [00:17:29] Speaker 00: doubting that there's still a significant issue in the compliance as to whether they're doing, excuse me, whether any remedy is due here, right? [00:17:39] Speaker 03: That is entirely correct, Your Honor. [00:17:41] Speaker 03: Again, there is evidence that, from a factual standpoint, that there might have been some loss of jobs and possibly for overtime. [00:17:48] Speaker 03: But in a compliance proceeding, and it's completely speculative at this point, but the board general counsel would determine whether there is any actual loss of income or work by employees. [00:18:00] Speaker 03: And if it turns out that the investigation shows that there wasn't, then [00:18:04] Speaker 03: there would be no monetary remedy and there would simply be a cease and desist order and an Otis posting. [00:18:09] Speaker 03: So that's an issue that is appropriately left for the compliance stage of this proceeding. [00:18:17] Speaker 02: Unless this court had any further judge row. [00:18:22] Speaker 05: No, thank you. [00:18:25] Speaker 03: The board would simply ask that the court enforce its order. [00:18:27] Speaker 03: Thank you, your honor. [00:18:29] Speaker 02: All right. [00:18:29] Speaker 02: Thank you, Mr. Said. [00:18:32] Speaker 02: Um, [00:18:33] Speaker 02: Mr. Coldis will give you two minutes on rebuttal. [00:18:38] Speaker 01: Thank you, Your Honor. [00:18:40] Speaker 01: On a couple of issues. [00:18:43] Speaker 01: The record does reflect that there were some layoffs. [00:18:46] Speaker 01: I think that actually that is a result of a charge that was settled [00:18:51] Speaker 01: somewhere along this process. [00:18:55] Speaker 01: The layoffs involved were, I think, there were five people, and I think the layoffs lasted for three or four days or less than that. [00:19:03] Speaker 01: They were brought back very quickly. [00:19:06] Speaker 01: So the layoffs really were not anything resulting from the masses project. [00:19:16] Speaker 01: To suggest that Bob's could have hired more employees into the unit, I would say that that goes to our alternative argument that Judge Edwards referenced, which was that, you know, Bob's did hire additional employees. [00:19:32] Speaker 01: And if they in fact considered Bob's employees, then they would be considered unit employees. [00:19:41] Speaker 01: suggests that that's what he could do, that is in fact what he did do, and he did it consistent with his past history, as the record reflects, which is typically to use temporary employee agencies to supply workers. [00:19:57] Speaker 01: The record shows that BJ was not able to supply any additional workers, so he went to a different temp agency to get those additional workers. [00:20:06] Speaker 01: Again, those would be part of the alternative argument. [00:20:09] Speaker 01: With regard to the 111 employees, that was over the total of the entire time that the masses contract was in place. [00:20:16] Speaker 01: I think the record reflects that at any particular point in time, there were basically 18 to 20 employees that were working at the same time. [00:20:24] Speaker 01: So when you say that only four out of 111, it was four people doing that job, [00:20:31] Speaker 01: but it could have been four different people out of that 111. [00:20:34] Speaker 01: So the 111, I think, is a bit of an overstatement in terms of what the record would reflect. [00:20:42] Speaker 02: All right. [00:20:42] Speaker 02: Thank you. [00:20:43] Speaker 02: We have your argument and we will take the case under advisement.