[author: Mark Theodore]

Sometimes in negotiations the parties just cannot agree on certain items. Such a deadlock under certain circumstances can have legal consequences under the concept of “impasse,” one of the more shadowy, hard to define issues in labor law. A true legal impasse over an important issue can allow one party to temporarily suspend negotiations, and in more serious cases result in implementation of terms proposed. A true impasse is hard to define because it is a result of the back and forth of the parties; sometimes the parties continue to discuss issues even though they cannot agree. How much do we have to continue talking if it is clear we are not getting any closer to agreement? Ultimately, if one party believes an impasse exists and it suspends bargaining, it does so at its peril because ultimately the NLRB may have to decide whether a true impasse actually existed.

Recently, a three judge panel of the District of Columbia Circuit Court of Appeals rejected an NLRB decision finding that an employer had engaged in bad faith bargaining by suspending negotiations based on a deadlock over certain items. In Erie Brush & Mfg. Corp. v. NLRB (DC Circ. November 27, 2012) the Court concluded that the NLRB did not have substantial evidence to support its decision of bad faith bargaining. In fact, the Court held, “we conclude that the record evidence not only does not support the Board’s finding, but uniformly supports [the employer's] position.”

In this case, the employer and the union were bargaining over an initial collective bargaining agreement. The parties agreed, as is very common in labor relations, to discuss non-economic (i.e., language items) first and then economics. The parties ultimately agreed on all language items except for two. The union wanted a “union security” clause requiring all bargaining unit employees to become and remain members of the union as a condition of employment; the employer wanted an “open shop” where no membership would be required. The union also wanted an arbitration clause; the employer did not. During the discussion over these issues the union representative made statements that he had no room to compromise on these issues and that they would “make or break on [the] whole contract.” Eventually, the union representative stated he believed the parties were at impasse over these issues; the employer representative agreed. The union representative then requested mediation over the issues. The employer would not agree given that there appeared no compromise could be reached. The union representative then suggested discussing economic items. The employer refused to meet, noting if there was no indication that the union would change its position on union security that it would be pointless to meet.

The parties finally agreed to meet after the union threatened to file an unfair labor practice charge. Before that meeting occurred, a majority of the employees presented a petition to the employer stating they no longer wished to be represented by the union. The employer then withdrew recognition and cancelled the meeting.

The union filed charges. A divided NLRB (Member Hayes dissenting) ruled that the employer’s refusal to bargain constituted a violation of the Act, which ultimately ”tainted” the decertification attempt. The employer appealed, asserting that the existence of the lawful impasse privileged its refusal to bargain. The Court agreed, noting that

Impasse on a single critical issue can create an impasse on the entire agreement. See CalMat Co., 331 NLRB 1084, 1097 (2000). A party asserting impasse based on a single issue must show that:  first, a good-faith bargaining impasse actually existed; second, the single issue involved was critical; and third, ‘the impasse on this critical issue led to a breakdown in the overall negotiations.’ Id.

In evaluating the case under these three factors, the Court noted the Board “does not dispute” that the second factor – union security was critical to the parties – had been met.

The Court then analyzed the NLRB’s findings with respect to the first and third factors. As to the first, -whether a good faith impasse ”actually existed”- the Court noted that a mere request for further meetings was insuffiicient to prove no impasse existed. The Court noted the union repesentative “explicitly stated that the parties were ‘at impasse’ on the issues” and had merely advanced a proposal that had been previously rejected. Moreover, the Court noted the most the union representive had promised to do was discuss the issue with his principals, and that “a negotiating agent’s bare promise to continue discussing with his principal the topics of negotiations does not imply any moderation of the party’s position.” So, merely requesting further meetings without any concrete indication that the deadlock could be broken is not sufficient to defeat a claim that the parties were at impasse, particularly when the union representative ”said–out-loud and in-person that they were ‘at impasse.’”

The Court then evaluated the third factor – whether the critical issue led to an overall breakdown in negotiations. The NLRB had ruled that the employer failed to prove negotiations had broken down. The Court disagreed, concluding that the Board had substituted its judgment for that of the parties:

Both parties considered union security ‘make or break’ on the entire contract.  As in CalMat, the critical issue ‘pervaded negotiations’ and the parties’ ‘positions never changed.’ 331 NLRB at 1098. The Board’s claim that one of the parties would decide to change its position on union security ‘was not based on the record evidence; rather the Board relied on its intuitive belief that, upon further bargaining, each side would have made additional concessions.’ TruServ, 254 F.3d at 1116. Such rank speculation cannot form the basis of a sound administrative finding for we have emphasized that ‘each party, not the Board, determines at what point it ceases to be willing to compromise.’ Id. “You never know” is no substitute for substantial evidence.

This is important because while the Board’s expertise is often given a great deal of deference, its conclusions must ultimately be based on evidence.

Finally, the Court addressed the assertion made by the union on appeal that no impasse could have been reached if the parties had not yet discussed economic items. The Court viewed this with some scepticism but ultimately concluded it need not reach the issue because “the Board expressly refused to rest its decision on that proposition.” So the existence of other issues the parties had yet to discuss, in this case economic items, did not foreclose a finding of impasse over a “critical issue.”

In the end, the union’s claim at bargaining that the parties were at impasse certainly proved fatal to a later assertion that no impasse existed. Such admissions are not always made even when it is clear an impasse exists. The case is instructive, though, in that it demonstrates that the record of bargaining over issues ultimately is going to be of fundamental importance to a legal determination on the rights of parties.