Car Dealer Violated NLRA by Scrapping Mechanics Union

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Kevin McGowan

Aug. 4 — An Illinois car dealer violated the National Labor Relations Act by failing to engage in effects bargaining and withdrawing recognition of a union representing six mechanics when it closed the dealership where the mechanics worked and moved them to a nonunion facility, the U.S. Court of Appeals for the District of Columbia Circuit ruled Aug. 4.

Enforcing a National Labor Relations Board decision, the court rejected Burke Automotive Group Inc.'s argument that once the six mechanics in the union-represented unit at Dodge of Naperville were combined with a larger group of nonunion mechanics at Naperville Jeep Dodge in Lisle, Ill., it no longer had to recognize International Association of Machinists Local 701 as the six mechanics' bargaining representative.

Instead, the court said the NLRB properly found Burke Automotive failed to establish the “compelling circumstances” that would justify disregarding the historic Naperville unit of mechanics. The court emphasized that Burke failed to engage in any bargaining with the union over the effects of the Naperville shutdown and relocation of the mechanics to the Lisle dealership, where the 14 nonunion mechanics received considerably lower wages and benefits.

The court's decision “is limited to these particular facts,” the D.C. Circuit said.

“We might have reached a difference conclusion had effects bargaining taken place and resulted in only modest differences between the two groups in wages and benefits,” Judge Robert Leon Wilkins wrote. “The Board itself has recognized that it can be unworkable to continue recognizing a union representing only a historic bargaining unit if unit employees are working side-by-side with non-unit employees.”

“It may turn out that Burke's withdrawal of recognition was simply premature—but premature is still improper,” the court said. “We therefore uphold as reasonable the Board's conclusion that Burke Automotive unlawfully withdrew recognition of the union when it did so immediately upon the relocation, prior to any effects bargaining.”

Judges Patricia A. Millett and Merrick B. Garland joined in the decision.

Chrysler Bankruptcy Forced Shutdown 

As part of Chrysler Corp.'s bankruptcy in 2009, Burke Automotive had to close one of its dealerships in the Chicago suburbs. It shuttered Dodge of Naperville but permitted the six union-represented mechanics there immediately to begin working at the Lisle dealership.

The rub was that mechanics at the Lisle dealership weren't union-represented and had lower wages and benefits. Burke informed the Naperville mechanics that if they didn't move to the nonunion dealership, they would be viewed as having quit and couldn't collect unemployment compensation.

Burke also ceased to honor the collective bargaining agreement it had reached with IAM Local 701 covering the Naperville mechanics. At the Lisle dealership, the relocated mechanics worked alongside the incumbent nonunion mechanics and received pay and benefits at the nonunion rates.

The union filed charges against Burke, and the NLRB general counsel issued an unfair labor practice complaint. Following a 2010 hearing, an NLRB administrative law judge found Burke had violated sections 8(a)(5) and 8(a)(1) of the act by failing to bargain over the effects of the Naperville mechanics' relocation and by withdrawing union recognition. The board affirmed in 2012, but one member dissented from the finding Burke unlawfully withdrew union recognition (357 NLRB No. 183, 192 LRRM 1459 (2012)).

Burke appealed to the D.C. Circuit, and the board cross-appealed for enforcement.

‘Effects' Bargaining Required 

Burke violated the NLRA by not engaging in effects bargaining because the dealer didn't inform the union about the move until after it happened and “even then refused to engage in any discussions,” the court said.

Burke was required to bargain about the former Naperville mechanics' initial wages, benefits, schedules and other working terms and conditions at the Lisle facility, the court said.

“The duty to engage in effects bargaining persists even if the employer's management decision renders the historic unit inappropriate for other purposes,” the court said. “Thus, an employer cannot avoid effects bargaining simply by waiting until after the change has taken place and then claiming that the bargaining unit is no longer viable.”

So even if the Naperville unit merged with the Lisle employees moving forward, Burke was obliged to bargain over the relocation's effects, the court said.

NLRB Gets Deferential Review 

Burke argued the historic Naperville unit became an “inappropriate unit” once the six mechanics merged with the larger, nonunion group of mechanics at the Lisle dealership.

The company argued the “only appropriate unit” was the aggregate unit of historic Lisle and former Naperville employees, that the merged group formed one “community of interest” and that the union lacked majority support. Burke therefore didn't violate the NLRA by withdrawing its union recognition, the company said.

In its decision, the board said that under other circumstances, it might agree with Burke that the merged mechanics' group couldn't be divided and a distinct unit of former Naperville mechanics shouldn't be recognized.

But the board said that when many of the employer's unilateral changes to the Naperville employees' working conditions were implemented without required effects bargaining, the circumstances changed. Because those unilateral changes were unlawful, they couldn't be disregarded in deciding if Burke also violated the act by withdrawing union recognition, the board said. Burke's failure to engage in any bargaining also made it impossible to assess what working terms and conditions the Naperville mechanics might have achieved if the employer hadn't acted unlawfully, the board said.

Saying it gives deferential review to the NLRB's determination of an appropriate bargaining unit, the D.C. Circuit affirmed Burke violated the act by withdrawing its recognition of Local 701.

No ‘Compelling Circumstances' Shown 

Two modifications to the “community of interest” analysis are relevant here, the court said. The NLRB is reluctant to alter the “historical relationship” between a unit and its union and therefore gives “significant weight” to a unit's bargaining history, the court said. It found an employer must show “compelling circumstances” warrant modification of the unit.

Also, when evaluating community of interest factors, the board ignores any impermissible changes made unilaterally by an employer, such as those made without required effects bargaining, the court said.

The board properly applied those principles in concluding Burke failed to establish the “compelling circumstances” that would justify disregarding the historic Naperville unit, the court said.

Burke argued that even if it had engaged in effects bargaining, any changes made with respect to mandatory bargaining topics wouldn't have been sufficient to maintain the distinctiveness of the Naperville unit. The company said in other cases in which the board has refused to disturb a historical bargaining unit after a relocation or merger, factors beyond differing wages and benefits indicate the historical unit remained distinct.

Acknowledging “this is a tougher call,” the court nevertheless said the board's decision was supported by substantial evidence and not arbitrary.

In this case, in which Burke never attempted its required bargaining with the union, the board permissibly held withdrawal of union recognition also was a violation, the court said.

Litchfield Cavo LLP represented Burke Automotive Group and its associated dealerships. The NLRB and the Department of Justice represented the board.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/DODGE_OF_NAPERVILLE_INC_AND_BURKE_AUTOMOTIVE_GROUP_INC_DOING_BUSI.