NLRB Fails Its Own "Smell Test"

Posted 5:41 PM by Michael Fox

Today's decision in Titanium Metals Corp. v. NLRB (D.C. Cir. 11/30/04) [pdf] is illustrative of a number of points that might be surprising for those who do not often deal with the world of unions and collective bargaining. In a time when individual rights are the dominant theme in employer/employee matters, the case is a forceful reminder that when a union represents the workers, it is the union's, not the individual employee's, interest which prevails.

Here, a worker was terminated following his publishing of his own newsletter (today, it no doubt would have been a blog) but also after allegations that he had committed a costly mistake and lied about it. In accordance with the collective bargaining agreement, a grievance was filed and resolved at the third stage by a letter of understanding between the union and the company:

Mr. Smallwood was not discharged for engaging in protected concerted activities under the NLRA. The Company recognizes the Union's rights to communicate with represented employees, to post notices and other related Union materials on plant bulletin boards as outlined in the collective bargaining agreement, and to engage in all other legally protected rights and activities, including, but not necessarily limited to, the NLRA ... The Company's reasons for discharging Mr. Smallwood included issues such as insubordination, inappropriate conduct toward the Company and supervisory employees, ongoing and costly workmanship related infractions, providing misleading and inaccurate information related to melting incident investigations, etc.

Because of the settlement at the third stage, the grievance was not submitted to arbitration and Smallwood's termination stood.

Smallwood filed an unfair labor practice charge with the NLRB alleging that he had been terminated for engaging in protected concerted activity. The Board issued a complaint and the Administrative Law Judge found he had been terminated in violation of the NLRA. The ALJ also rejected the company's argument that the Board should defer to the settlement agreement between it and the union. Under existing Board precedent, such deferral is required when three conditions are met: (1) the grievance proceedings were fair and regular, (2) all parties agreed to be bound, and (3) the results of the settlement are not clearly repugnant to the purposes and policies of the NLRA. The ALJ refused to defer on the 3rd ground, that the settlement was clearly repugnant to the purposes and policies of the NLRA.

The Board, while affirming the ALJ's decision disavowed the finding that the settlement was repugnant to the Act. Instead the Board held that the proceedings were not fair and regular. It based the finding on two reasons: Smallwood never received a copy of the grievance settlement and the reasons for termination stated in the settlement differed from what the company told Smallwood.

In rejecting both reasons, and refusing to enforce the Board's order relative to Smallwood's termination, the Court starkly points out the role of the union vs. the individual employee in the grievance process. With respect to the failure to give Smallwood a copy of the grievance, the Court said:

This is perplexing, for, in the context of this case, this fact is utterly innocuous. Smallwood knew he had been terminated; he knew that the Union did not settle the grievance on terms that were favorable to him; and he knew that the Union did not appeal the case to arbitration. In other words, he was clearly on notice of the fact that TIMET and the Union had resolved his grievance without providing him any of the remedies he had requested. He was free to ask his Union agent about the terms upon which his grievance was settled, but he did not do this. And the Board does not suggest that the Union withheld any materials related to Smallwood's grievance to which he was entitled under the collective bargaining agreement.

More importantly, it is legally irrelevant that Smallwood was not notified that the Union and TIMET had executed a Letter of Understanding with regard to his claims. Absent specified rights under a collective bargaining agreement, bargaining unit employees have no right to participate in contract grievance proceedings. ... Indeed, recognizing that a union is the collective bargaining agent of individual employees, the Board has made it clear that it will defer to grievance settlements even when a grievant objects to the settlement. ... The Board acknowledges that a union can settle an employee?s grievance over his objection, but argues that this case should be treated differently, because Smallwood was not informed of the precise terms of the settlement agreement between the Union and TIMET. ... This is a specious argument. Even if Smallwood had been notified of the precise details of the settlement, he could have done nothing to change it. The employer and union are the parties to the collective bargaining agreement and only they - not individual employees - determine how to interpret and enforce the agreement.

The argument that the reasons differed fared no better:

Assuming this is true, it does not support the Board?s conclusion that the settlement agreement was not fair and regular. The Union and TIMET were well within their rights to negotiate over Smallwood?s grievance under the contract grievance procedures and decide whether, and on what terms, Smallwood should be terminated.

In stretching for something on which to defend the Board's decision, its lawyer offered that this was a case that "just didn't smell right." Unfortunately, when pressed to explain what smelled bad about the case, she could "identify nothing that provides a legal justification for the Board?s refusal to defer to the settlement agreement." Ultimately, it was clear, at least to the Court of Appeals, it was the Board's decision which failed the smell test.

Congratulations to George E. Yund, a fellow member of the Management & Employment Law Roundtable, who argued the case for Titanium.

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