On November 27, 2012, in Erie Brush and Mfg. Corp. v. NLRB, the D.C. Circuit Court of Appeals vacated an NLRB decision and order finding that an employer violated the National Labor Relations Act by refusing to bargain, and held that “the evidence overwhelmingly points to the existence of impasse….”

Although the parties had negotiated for approximately 10 months and had agreed on all other noneconomic terms, they could not agree on union security and arbitration provisions. The Employer refused to participate in additional bargaining sessions, believing that the parties were at impasse, and withdrew recognition from the Union based on an employee decertification petition. The Union then filed charges and the General Counsel issued a complaint. The ALJ held that the Employer’s unlawful refusal to bargain tainted the decertification petition such that the Employer’s withdrawal of recognition also violated the Act. Despite the Employer’s exceptions, the Board affirmed the ALJ’s findings and ordered the Employer to post a notice, to cease and desist from refusing to bargain and to recognize the Union as the employees’ exclusive representative for at least 6 months.

In vacating the Board’s order, the Court recognized that the Employer successfully established the factors necessary to show that a single issue created impasse over the entire agreement: “first, a good-faith bargaining impasse actually existed; second, the single issue involved was critical; and third, the impasse on this internal issue led to a breakdown in the overall negotiations.” CalMat Co., 331 NLRB 1084, 1097 (2000). As the Board did not dispute that union security was a critical issue, the Court focused on the first and third factors.

In finding that a good faith impasse actually existed, the Court recognized that “at no point …[during the parties ten months of negotiations] did either party propose a compromise on union security or arbitration that was acceptable to the other party.” Further, the Union representative explicitly stated that he viewed negotiation as being at impasse and the Employer representative agreed.

The Court also rejected the Board’s reasoning that the Union representative’s suggestion of mediation “showed that he did not believe further bargaining over either issue would be futile.” The “mere invocation of mediation does not “somehow magically ward [ ] off a deadlock.” Further, “a vague request by one party for additional meetings, if unaccompanied by an indication of the areas in which that party foresees future concessions, is…insufficient to defeat an impasse where the other party has clearly announced that its position is final.” In rejecting the Board’s conclusion that one of the parties would change its position, the Court found that it “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.” As such, the Court commented: ” ‘You never know’ is no substitute for substantial evidence.”

In finding that the impasse on union security led to a breakdown in the overall negotiations, the Court reasoned: “Each party made clear throughout the negotiations…that it would not sign a contract that adopted the other party’s position on union security.”

Finally, the Court rejected the Board’s finding that “even if the parties were at a momentary impasse… it was broken well before [Erie] finally agreed … to resume bargaining.” In reaching this conclusion, the Court reasoned that there was no “substantial evidence establishing changed circumstances sufficient to suggest that future bargaining would be fruitful.” The Union representative’s promise to continue discussing the union security provision with the Union “was entirely inadequate to break the impasse as it did not “commit[] the Union to a new proposal or contain[] any specific proposals.”

As Erie and the Union were at a lawful impasse, Erie was relieved of its duty to bargain during the relevant time period. Therefore, the Court granted the petition for review and vacated the Board’s decision and order.

This case highlights the level of care that employers must exercise before declaring impasse and the diligence that may be necessary in proving it.