Smurfit-Stone Enterprises, Inc. (Fresno)

National Labor Relations Board - Board Decisions

Dec 22, 2011

357 N.L.R.B. 1732 (N.L.R.B. 2011)

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
357 NLRB No. 144
1732
Smurfit-Stone Container Enterprises and Teamsters
District Council No. 2, Local 388-M, affiliated
with International Brotherhood of Teamsters.
Cases 32–CA–024480 and 32–CA–024725
December 22, 2011
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS BECKER
AND HAYES
The primary issue in this case is whether the Respond-
ent violated Section 8(a)(5) and (1) of the Act by condi-
tioning a plant closure effects agreement on the Union’s
consent to mid-term cancellation of the parties’ collec-
tive-bargaining agreement. Absent an applicable reopen-
er provision, midterm modification of a collective-
bargaining agreement is a nonmandatory subject of bar-
gaining, and as such it cannot be insisted on as a condi-
tion for reaching agreement on mandatory subjects. The
judge recommended dismissal of the complaint, howev-
er, concluding that, under the circumstances presented
here, the Respondent’s midterm contract termination
proposal was sufficiently intertwined with other, manda-
tory subjects so as to become a mandatory bargaining
subject. Alternatively, applying the impasse factors set
forth in Taft Broadcasting Co.,1 the judge found that,
even assuming midterm contract termination remained a
permissive subject, the Respondent did not insist on it to
impasse.2
The National Labor Relations Board has considered
the decision and the record in light of the exceptions and
briefs,3 and has decided to affirm the judge’s rulings,

1 163 NLRB 475 (1967), affd. sub nom. Television Artists AFTRA v.
NLRB, 395 F.2d 622 (D.C. Cir. 1968).
2 On April 5, 2010, Administrative Law Judge Jay R. Pollack issued
the attached decision. The General Counsel and the Charging Party
each filed exceptions and a supporting brief, the Respondent filed a
brief answering both sets of exceptions, and the General Counsel filed a
reply brief.
3 In its answering brief, the Respondent moves to strike the General
Counsel’s and the Union’s exceptions in their entirety for failure to
comply with the Board’s Rules and Regulations. Alternatively, the
Respondent moves to strike them to the extent they fail to comply with
the Board’s Rules and Regulations.
Both sets of exceptions substantially comply with the Board’s re-
quirements. See Sec. 102.46(b) of the Board’s Rules and Regulations.
The motion to strike the exceptions in their entirety is therefore denied.
See, e.g., Lee’s Industries, 355 NLRB 1267, 1267 fn. 1 (2010). Howev-
er, we find merit in the Respondent’s motion to the extent that it ad-
dresses those parts of the Union’s exceptions and brief that go beyond
the General Counsel’s theory of the case and are unsupported by record
evidence. Accordingly, consistent with the Respondent’s alternative
motion, we will strike union exceptions 1 and 3, and items 1, 3, 4, and 5
at pp. 3–5 of its exceptions brief. See, e.g., ATC/Forsythe & Associates,
341 NLRB 501, 501 fn. 1 (2004).
findings, and conclusions only to the extent consistent
with this Decision and Order.
In disagreement with the judge, we find that the Re-
spondent’s contract termination proposal was a non-
mandatory subject, and that the Taft Broadcasting im-
passe factors are inapplicable here. Accordingly, the Re-
spondent’s conditioning its acceptance of the parties’
plant-closure effects agreement on the midterm cancella-
tion of their collective-bargaining agreement constituted
a failure to bargain in good faith about the effects of the
plant closure—a mandatory subject of bargaining—and
thereby violated Section 8(a)(5) and (1).
Background
The Respondent manufactures and distributes corru-
gated boxes. It operates a number of plants in California,
and the Union represents employees at many of them.
The facility involved in the present case was located in
Fresno, where the Union had represented production and
maintenance employees for about 40 years. The parties’
last collective-bargaining agreement covering the plant
dated from March 1, 2005, and was to expire by its terms
on February 28, 2011. The Respondent closed the Fresno
plant in September 2009 for economic reasons. As ex-
plained below, negotiations for a plant closure effects
agreement took place but were unsuccessful.
Two earlier negotiations between the Respondent and
the Union are relevant here. In 2004, the parties reached
an effects agreement concerning the closure of the Re-
spondent’s plant in San Jose. In that agreement, the Re-
spondent agreed to severance payments and an extension
of medical benefits for the bargaining unit employees in
exchange for the Union’s consent on two matters: the
immediate suspension of unit seniority and cancellation
of the existing collective-bargaining agreement when the
plant closed or after the last employee was laid off,
whichever occurred later.
Also in 2004, the Respondent and the Union engaged
in successor contract negotiations for the Fresno unit
(among others), which resulted in the parties’ 2005–2011
collective-bargaining agreement.4 During bargaining, the
Union proposed a specific severance-pay formula in the
event that the Fresno plant were to close. The Respond-
ent countered with a two-part offer. First, it proposed
contract language recognizing the Union’s right to dis-
cuss severance pay in the event of a Fresno closing. Se-
cond, it proposed that, in a separate memorandum of
agreement, it would promise to offer the Union a sever-
ance pay formula for the Fresno employees not incon-

4 The parties engaged in multilocation bargaining in 2004, resulting
in several successor collective-bargaining agreements in addition to the
one at Fresno.
SMURFIT-STONE CONTAINER ENTERPRISES 1733
sistent with the San Jose closure settlement. The Union
accepted this proposal and dropped its severance formula
demand.
In September 2008, the Respondent announced that the
Fresno plant would begin winding down operations and
permanently laying off unit employees in late November.
The Respondent estimated that the plant closure would
be final within a year. Subsequently, the Respondent
informed the Union that some unit employees might con-
tinue working in the warehouse department after the rest
of the facility terminated operations.
As more fully detailed in the judge’s decision, between
late September 2008 and early May 2009, the Respond-
ent and the Union met six times for closure effects nego-
tiations.5 The Respondent’s offer was, in essence, sever-
ance pay and an extension of medical benefits for unit
employees, in exchange for the immediate suspension of
unit seniority and cancellation of the 2005–2011 bargain-
ing agreement when the number of remaining unit em-
ployees fell to a specified cutoff.6
The Respondent’s insistence on mid-term cancellation
of the agreement was the primary point of dispute
throughout those negotiations. The Union’s response to
each of the Respondent’s early-termination proposals
was that the contract must remain effective until its 2011
expiration date. The Union was willing, however, to con-
sider a midterm cancellation that specifically reflected
the contract termination language in the 2004 San Jose
settlement—i.e., when the plant closed or after the last
employee was laid off, whichever occurred later. But it
adamantly opposed termination of the Fresno contract
while any unit employee remained working.
When the Union did not agree to the Respondent’s
“last, best and final” closure effects offer, the Respond-
ent withdrew it on May 5, 2009. There were no effects
negotiations after that date. On September 1, 2009, the
plant closed and the last four unit employees were laid
off.7 The Fresno property was sold a week later.
Discussion
When an employer decides to close a facility solely for
economic reasons, it is not obliged to bargain over that
decision, but it is required to negotiate with its unit em-
ployees’ bargaining representative concerning the effects

5 The parties did not bargain about the Respondent’s decision to
close the facility, and it is not an issue in this case.
6 Initially, the Respondent proposed that the contract terminate when
there were five or fewer employees. By the last bargaining session, the
Respondent’s position was contract termination when there was “one or
fewer” employees.
7 There were 92 employees in the bargaining unit when the Re-
spondent announced that it was initiating the closure process. By March
24, 2009, only four unit employees were still working at the plant.
of its decision.8 If, at that time, the employer and union
are parties to a collective-bargaining agreement, either
party may propose to modify a provision of that agree-
ment—such as its duration clause—and the other party is
free to consent. But absent a reopener provision cover-
ing the proposal, under Section 8(d) of the Act the other
party is under no obligation to consent to the modifica-
tion or even to discuss it.9 The mid-term modification
proposal is accordingly a nonmandatory subject of bar-
gaining.10 It is a violation of Section 8(a)(5) for an em-
ployer to insist on a union’s consent to a nonmandatory
proposal as a condition of reaching agreement on manda-
tory bargaining subjects. See, e.g., Borg-Warner Corp. v.
NLRB, 356 U.S. 342, 347–349 (1958).11
In the present case, the Respondent did not dispute that
a proposal to terminate a collective-bargaining agreement
prior to its expiration date is normally a nonmandatory
subject of bargaining.12 But the Respondent claimed,
and the judge agreed, that the relevant circumstances of
the parties’ negotiation over the effects of the Fresno
plant closing served to “convert” the Respondent’s pro-
posal for mid-term contract cancellation into a mandatory
subject.
1. The judge’s primary rationale: a permissive subject
became mandatory
The judge found that the subject of early contract ter-
mination was part of a package proposal in the Fresno
effects bargaining. The package also included suspen-
sion of seniority rights, severance pay, and continuation
of medical benefits. In the judge’s view, these four com-
ponents fulfilled the Respondent’s promise in the 2004
successor-contract negotiations to make a severance offer
consistent with the parties’ San Jose closure settlement in
the event that the Fresno plant closed. The judge further
found that contract cancellation and suspension of sen-

8 First National Maintenance Corp. v. NLRB, 452 U.S. 666, 681–
682, 686 (1981); see also Willamette Tug & Barge Co., 300 NLRB 282,
284 (1990).
9 See, e.g., Boeing Co., 337 NLRB 758, 762–763 (2002), and cases
cited there.
10 See, e.g., New Seasons, Inc., 346 NLRB 610, 617–618 (2006);
Chesapeake Plywood, 294 NLRB 201, 211–212 (1989), enfd. mem.
917 F.2d 22 (4th Cir. 1990).
11 Accord: Westvaco Corp., 289 NLRB 301, 306 (1988). See also
Vanguard Fire & Security Systems, 345 NLRB 1016, 1017, 1043
(2005), enfd. 468 F.3d 952 (6th Cir. 2006); Timken Co., 301 NLRB
610, 614–615 (1991); Latrobe Steel Co., 244 NLRB 528, 531–532
(1979), enfd. in relevant part 630 F.2d 171 (3d Cir. 1980), cert. denied
454 U.S. 821 (1981).
12 Of course, contract duration is a mandatory subject when negotiat-
ing for a new collective-bargaining agreement. See, e.g., ServiceNet,
Inc., 340 NLRB 1245, 1247 (2003); Steelworkers Local 2140 (United
States Pipe), 129 NLRB 357, 360 (1960), petition for review denied
298 F.2d 873 (5th Cir. 1962), cert. denied 370 U.S. 919 (1962).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1734
iority amounted to consideration for the Respondent’s
severance pay and medical benefits offer. He concluded,
therefore, that cancellation of the contract, and seniority
suspension as well, “took on the characteristics of the
mandatory subjects” in the overall proposal.13 Because
(as he saw it) mid-term contract cancellation had effec-
tively become a mandatory subject, the judge concluded
that the Respondent’s insistence that the contract termi-
nate before its expiration date was lawful bargaining
conduct.
In three prior cases, the Board has considered circum-
stances where a bargaining subject usually considered
nonmandatory may “become” mandatory based on the
nature of its relationship with mandatory subjects under
negotiation. In Sea Bay Manor Home for Adults, 253
NLRB 739 (1980), enfd. mem. 685 F.2d 425 (2d Cir.
1982), the Board found that the employer violated Sec-
tion 8(a)(5) by repudiating an agreement that all out-
standing issues in the parties’ current negotiations would
be settled by interest arbitration. The Board concluded
that the parties’ interest-arbitration agreement—normally
a nonmandatory matter related to future negotiations—
”was so intertwined with and inseparable from the man-
datory terms and conditions for the contract currently
being negotiated as to take on the characteristics of the
mandatory subjects themselves.”14 The Board repeatedly
characterized the parties’ bargaining situation as
“unique.”15
In two subsequent cases—both involving layoff-effects
bargaining—the Board considered whether a proposal
that employees sign a release of the employer’s legal
liability constituted a mandatory subject in light of a sev-
erance pay proposal also under negotiation. The Board’s
decisions turned on whether the liability release was
“general,” and thus lacking a “sufficient nexus” with
severance pay, a mandatory subject,16 or sufficiently spe-
cific to the employer’s potential liability arising out of
the layoffs that a cost/benefit linkage with severance pay
was evident.17
What those cases teach is that a bargaining subject
otherwise considered nonmandatory constitutes a manda-

13 It is undisputed that the Respondent’s offers regarding severance
pay and medical benefits concerned mandatory bargaining subjects.
Unit seniority was covered by the collective-bargaining agreement and
thus, like the contract’s duration, was presumptively a nonmandatory
subject for the term of the contract. However, the bargaining-subject
status of seniority rights is not at issue in this case.
14 253 NLRB at 740.
15 Id. at 740, 741 fn. 9.
16 Borden, Inc., 279 NLRB 396, 399 (1986) (finding liability release
proposal nonmandatory).
17 Regal Cinemas, 334 NLRB 304, 305–306 (2001) (finding liability
release proposal effectively a mandatory subject), enfd. 317 F.3d 300
(D.C. Cir. 2003).
tory subject if it has a “sufficient nexus”18 to mandatory
subjects under negotiation. To establish the requisite
nexus, the subjects must be “intertwined” and “insepara-
ble,”19 perhaps demonstrating a connection with “recip-
rocal [cost/benefit] effects.”20 Such cases are rare,21 and
this case is not one of them.
Here, the Respondent did not attempt to demonstrate,
and the judge did not find, a sufficient nexus. Rather, the
judge found only that early contract termination was one
of four components of the Respondent’s overall closure-
effects proposal, and that it was part of the consideration
requested in exchange for the Respondent’s offer of sev-
erance pay and extended medical benefits. To the extent
that early contract termination was sought as a “quid pro
quo” for severance pay and continued medical coverage,
that is insufficient, standing alone, to establish the requi-
site nexus.22 Otherwise, “a permissive subject of bargain-
ing would become mandatory whenever it was presented
together with a mandatory subject,”23 and pairing the two
would become “a device to circumvent the general rule
that one may not insist on [a permissive subject] to im-
passe.”24
Accordingly, we reject the judge’s analysis. We find
no sufficient nexus between early contract termination
and either severance pay or extended medical benefits, or
both, that would convert the Respondent’s early-
termination proposal into a mandatory bargaining subject
under the precedent cited above. Consequently, it is un-
necessary for us to address the question of whether a
nexus with mandatory subjects can ever be sufficient to
avoid the Borg-Warner rule when the bargaining pro-
posal involves the midterm modification of a collective-
bargaining agreement that does not include a reopener
provision.25

18 Borden, supra at 399.
19 Id.
20 Regal Cinemas, supra at 305.
21 Sea Bay Manor, supra at 740.
22 Compare Regal Cinemas, supra at 305–306 (quid pro quo nature
of the employer’s proposal only one factor in the analysis).
23 Borden, supra at 399.
24 Dependable Storage, Inc., 328 NLRB 44, 50 (1999).
25 Compare, e.g., New Seasons, Inc., supra at 618 fn. 9 (contract sub-
jects not encompassed by reopener provision cannot be bargained to
lawful impasse regardless of their relationship with subjects within the
reopener provision).
Member Hayes concurs in finding that the Respondent failed to
prove a reasonably necessary nexus between the customarily permis-
sive subject of midterm contract termination and the mandatory bar-
gaining subjects in its effects bargaining proposal. The only apparent
basis for arguing that these must be negotiated as an all or none pack-
age—that the parties had previously negotiated a similar agreement for
the San Jose facility—is clearly insufficient. Member Hayes expresses
no view beyond the circumstances of this case as to when the relation-
SMURFIT-STONE CONTAINER ENTERPRISES 1735
2. The Respondent’s alternative analysis:
union waiver
In its answering brief, the Respondent presents an al-
ternative rationale for finding its early termination pro-
posal a mandatory bargaining subject. The Respondent
contends that the “very essence” of the linkage between
early termination and the other three parts of its closure-
effects offer is that the Union had agreed in advance that
these four concepts—early contract termination and sen-
iority suspension, in exchange for severance pay and
extended medical coverage—would be the basis of any
effects settlement if Fresno closed. In other words, by its
purported, earlier agreement, the Union waived its 8(d)
right to withhold consent to a midterm modification of
the contract’s duration.
In his reply brief, the General Counsel observes, cor-
rectly, that a waiver of a statutory right under the Act
must be demonstrated with clear and unmistakable evi-
dence,26 and that it is the Respondent’s burden to prove
waiver under this exacting standard.27 A reopener clause
covering contract duration would provide evidence of
such a waiver.28 However, there is no relevant reopener
provision in the parties’ 2005–2011 collective-bargaining
agreement.
The Respondent contends that the Union agreed to the
four-part framework, including early contract termina-
tion, during the 2004 bargaining for a successor contract
at Fresno. The record does not support this claim. As set
forth in the background section above, in the 2004 nego-
tiations, the Union abandoned its demand for a specific
severance pay formula in exchange for contractual lan-
guage recognizing the Union’s right to discuss severance
pay in the event of a plant closure, plus a memorandum
of agreement stating
the Company’s intent in future plant closures, if any, to
bargain a severance/impact bargaining formula that is
not inconsistent with its severance/impact bargaining
agreement[s] at San Jose.
Stated otherwise, in the event Fresno closed, the Respondent
committed to an “intent” to follow a bargaining formula
“not inconsistent” with the San Jose closure-effects settle-
ment. In response, the Union agreed to drop its severance-
pay formula demand; it committed to nothing regarding
future closure effects negotiations.

ship between permissive and mandatory bargaining subjects requires
bargaining to agreement or impasse as to all.
26 See, e.g., Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708
(1983).
27 See, e.g., Wayne Memorial Hospital Assn., 322 NLRB 100, 104
(1996).
28 See Speedrack, Inc., 293 NLRB 1054, 1054–1055 (1989).
But even assuming the Union’s acceptance of the Re-
spondent’s statement of intent implied a reciprocal intent
to apply the San Jose framework at Fresno, the parties
differed in their views of what that framework entailed.29
The parties’ 2008–2009 effects bargaining discloses a
mutual understanding that the four part San Jose closure
agreement provided a model for an effects settlement at
Fresno. Regarding early contract termination in particu-
lar, however, the parties had crucially different under-
standings of what the San Jose agreement represented.
To the Respondent, it meant early cancellation of the
collective-bargaining agreement, specifics to be deter-
mined but not excluding the option of terminating the
contract while at least one unit employee remained em-
ployed. To the Union, it meant early termination of the
contract in exactly the way the issue was resolved at San
Jose: when the plant closed or when all unit employees
had been laid off, whichever occurred later. The parties
never bridged this gap.
In sum, the evidence shows that the Union engaged in
voluntary discussion of a subject covered by the current
contract.30 The parties explored what it would take for
the Union to consent to modify the contract’s expiration
date. The Respondent has not proved, however, that there
was any prior agreement requiring the Union to discuss
modification of the contract’s term in plant closure bar-
gaining, which in effect would have “reopened” the con-
tract’s duration clause and restored its status as a manda-
tory subject.31
3. The judge’s alternative rationale: the Respondent
did not bargain to impasse
We conclude that midterm contract cancellation was,
and remained, a nonmandatory subject during the parties’
effects negotiations. In an alternative finding, the judge
determined that, even if this were so, the Respondent did
not bargain to impasse over its contract termination posi-
tion, and therefore did not violate Section 8(a)(5) under
Borg-Warner, supra at 342. In so finding, the judge ap-
plied the impasse factors set forth in Taft Broadcasting
Co.32 But Taft Broadcasting does not apply here.
The Taft factors are appropriately applied to determine
whether a bargaining impasse has been reached when
parties have bargained in good faith. However, condi-

29 Member Hayes does not rely on this portion of the waiver analy-
sis.
30 See, e.g., Boeing Co., supra at 762–763.
31 Given its failure to prove such an agreement, we find it unneces-
sary to consider whether the Respondent would have been required to
satisfy the notice requirements of Sec. 8(d) concerning the Fresno ef-
fects negotiations. See, e.g., Speedrack, supra at 1055.
32 163 NLRB 475 (1967), affd. sub nom. American Federation of
Television Artists AFTRA v. NLRB, 395 F.2d 622 (D.C. Cir. 1968).
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1736
tioning agreement regarding mandatory subjects on ac-
ceptance of a nonmandatory proposal is not good-faith
bargaining.33 In short, a party precludes good-faith im-
passe when it insists on such a proposal as the price of an
agreement.34
The proper legal test in this case for unlawful insist-
ence under Borg-Warner is “whether agreement on the
mandatory subjects of bargaining [was] conditioned on
agreement on the nonmandatory subject of bargaining.”35
That is precisely what the Respondent did here. The
judge found, and we agree, that the Respondent “was
offering the continuation of medical benefits and sever-
ance pay only on the condition that the Union agree[d] to
early termination of the contract.” No later than the se-
cond bargaining session on November 21, 2008, and for
the remainder of the closure effects negotiations, the Re-
spondent conditioned any final effects agreement on
midterm cancellation of the parties’ contract while unit
employees—whether as many as five or as few as one—
were still working at the plant. When the Union rejected
the Respondent’s proposals and refused to agree to early
contract termination, as it was entitled to do, the Re-
spondent withdrew its “last, best, and final” closure-
effects offer and ceased bargaining. Thus, the Respond-
ent began its unlawful insistence in November 2008 and
persisted in it at all times thereafter.
Accordingly, we find that, as of November 21, 2008,36
the Respondent was violating Section 8(a)(5) under

33 See American Commercial Barge Line Co. v. NLRB, 918 F.2d
1299, 1307–1310 (7th Cir. 1990); Latrobe Steel Co. v. NLRB, 630 F.2d
171, 179 (3d Cir. 1980) (“We have grave doubts . . . as to the useful-
ness of the concept of ‘impasse’ as a level of disagreement over a sin-
gle issue where that issue is a non-mandatory subject of bargaining. As
Borg-Warner makes clear, there can be no adverse consequence from a
party’s failure to agree or even his failure to bargain about a nonmanda-
tory subject of bargaining. What Borg-Warner prohibits is insistence
upon a nonmandatory subject as a condition precedent to entering an
agreement [citation omitted]. This is the standard which must guide the
inquiry.”).
34 See Inland Tugs, supra at 1310.
35 Taft Broadcasting Co., 274 NLRB 260, 261 (1985).
36 The complaint alleged that the Respondent’s unlawful conduct oc-
curred between March 24 and May 4, 2009. We have varied from this
allegation to find the violation as of November 21, 2008. The Respond-
ent is not thereby prejudiced, however, as the violation found is closely
related to the complaint’s allegations and was fully litigated. Pergament
United Sales, 296 NLRB 333, 334–335 (1989), enfd. 920 F.2d 130 (2d
Cir. 1990). Scrupulous adherence to dates alleged in a complaint is not
necessarily required, see Salon/Spa at Boro, Inc., 356 NLRB 444, 461–
462 (2010), and to do so here would elevate form over substance. The
Respondent has never disputed that it did, in fact, condition agreement
on early contract termination. On the contrary, it has consistently
acknowledged doing so, contending that its insistence was lawful either
because early termination was a mandatory subject or the Union waived
its right to withhold consent. Thus, when it began to insist on early
termination has never been material to the theory of the Respondent’s
defense. The record shows that the insistence began in November
Borg-Warner by conditioning any agreement concerning
the effects of the Fresno closure on the Union’s consent
to a nonmandatory subject: midterm cancellation of the
parties’ 2005–2011 contract.
CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in com-
merce within the meaning of Section 2(2), (6), and (7) of
the Act.
2. The Union is a labor organization within the mean-
ing of Section 2(5) of the Act.
3. The Respondent has failed and refused to bargain in
good faith in violation of Section 8(a)(5) and (1) of the
Act by demanding, as a condition of reaching an agree-
ment on the effects of its decision to close its Fresno fa-
cility, that the Union consent to midterm cancellation of
the parties’ 2005–2011 collective-bargaining agreement.
REMEDY
Having found that the Respondent has engaged in cer-
tain unfair labor practices, we shall order it to cease and
desist and to take certain affirmative action designed to
effectuate the policies of the Act.
In Borg-Warner, the Court stated that unlawfully con-
ditioning a bargaining agreement on consent to a non-
mandatory proposal “is, in substance, a refusal to bargain
about the subjects that are within the scope of mandatory
bargaining.”37 In the present case, the Respondent unlaw-
fully conditioned an effects agreement on early contract
termination, a nonmandatory subject. Accordingly, it has
refused to bargain in good faith concerning the effects of
the Fresno plant closure, a matter of mandatory bargain-
ing. Therefore, we shall order the Respondent to bargain,
at the Union’s request, concerning the effects of the
Fresno plant closure without conditioning agreement on
the Union’s consent to a nonmandatory bargaining sub-
ject.
When an employer has refused to bargain over the ef-
fects of a plant closure, the Board typically orders a
Transmarine38 remedy to restore some measure of eco-
nomic strength to the union.39 In his exceptions brief, the
General Counsel renews the complaint’s request for a
Transmarine limited backpay remedy for the last four
unit employees laid off when the Fresno plant closed in
September 2009.40 The Union requests a Transmarine

2008, and it does not appear that the Respondent would have litigated
the matter any differently had the unlawful conduct at issue in this case
been alleged as beginning when it did, in fact, begin.
37 356 U.S. at 349.
38 Transmarine Navigation Corp., 170 NLRB 389 (1968).
39 See generally Rochester Gas & Electric Corp., 355 NLRB 507,
508 (2010) (discussing Transmarine remedy).
40 The complaint did not request this limited Transmarine order as
the exclusive remedy for the Respondent’s misconduct. The General
SMURFIT-STONE CONTAINER ENTERPRISES 1737
remedy for all 92 unit employees who were terminated
because of the decision to close the plant. We find merit
in the Union’s request. The record establishes that in
their negotiations, the parties intended to address the
impact of the Fresno closure on all 92 employees.41
However, as found above, because of its unlawful con-
duct the Respondent never satisfied its duty to engage in
meaningful, good-faith effects bargaining. All 92 termi-
nated employees have been denied the benefit of collec-
tive-bargaining representation concerning the effects of
the Fresno closure. Accordingly, we will provide a
Transmarine remedy for all 92 unit employees.42
More specifically, although we will order the Re-
spondent to bargain, meaningful bargaining cannot be
assured until some measure of economic strength is re-
stored to the Union, thus recreating a measure of bal-
anced bargaining power. A bargaining order alone, there-
fore, cannot serve as an adequate remedy for the unfair
labor practice committed.
In order to ensure that meaningful bargaining occurs
and to effectuate the policies of the Act, we deem it nec-
essary to accompany our bargaining order with a limited
backpay remedy designed to make whole the employees
for losses suffered as a result of the Respondent’s failure
to bargain in good faith about the effects of its plant-
closure decision, and to recreate in some practicable
manner a situation in which the parties’ bargaining posi-
tions are not entirely devoid of economic consequences
for the Respondent. We shall do so by ordering the Re-
spondent to pay backpay to the 92 terminated employees
in a manner similar to that required in Transmarine Nav-

Counsel requested “all other relief as may be just and proper to remedy
the unfair labor practices alleged.”
41 We observe that all five of the Respondent’s closure-effects pro-
posals make this clear.
42 The complaint separately alleged that the Respondent unlawfully
failed to engage in effects bargaining concerning the last four employ-
ees terminated when it closed down the facility. We find it unnecessary
to address this second unfair labor practice allegation, since the viola-
tion we have found encompasses and supersedes it.
Our dissenting colleague would limit the Transmarine remedy to
the last four employees laid off, consistent with that second allegation,
the General Counsel’s primary requested remedy, and the General
Counsel’s contingent request for administrative expenses in a collateral
bankruptcy proceeding, where the General Counsel did not address the
other 88 employees. None of these circumstances warrant denying
relief to those 88 employees. “[W]hether counsel for the General
Counsel seeks a backpay remedy is immaterial since we have full au-
thority over the remedial aspects of our decisions” to effectuate the
purposes of the Act. Schnadig Corp., 265 NLRB 147 (1982) (case
citations omitted). Accord: Williamette Industries, 341 NLRB 560, 564
(2004). In addition, we observe that the Charging Party requested a
Transmarine remedy for all 92 unit employees at the beginning of the
unfair labor practice hearing. Therefore, the Respondent was on notice
of the potential remedial consequences if the Borg-Warner violation
were found.
igation Corp., supra, as clarified by Melody Toyota, 325
NLRB 846 (1998).
Thus, the Respondent shall pay these 92 employees
backpay at the rate of their normal wages when last in the
Respondent’s employ from 5 days after the date of this
Decision and Order until the occurrence of the earliest of
the following conditions: (1) the Respondent bargains to
agreement with the Union on those subjects pertaining to
the effects of the closure on the 92 unit employees; (2)
the parties reach a bona fide impasse in bargaining; (3)
the Union fails to request bargaining within 5 business
days after receipt of this Decision and Order, or to com-
mence negotiations within 5 days after receipt of the Re-
spondent’s notice of its desire to bargain with the Union;
or (4) the Union subsequently fails to bargain in good
faith.
In no event shall the sum paid to these employees ex-
ceed the amount they would have earned as wages from
the date on which they were terminated to the time they
secured equivalent employment elsewhere, or the date on
which the Respondent shall have offered to bargain in
good faith, whichever occurs sooner. However, in no
event shall this sum be less than the employees would
have earned for a 2-week period at the rate of their nor-
mal wages when last in the Respondent’s employ. Back-
pay shall be based on earnings that the terminated em-
ployees would normally have received during the appli-
cable period, less any net interim earnings, and shall be
computed in accordance with F. W. Woolworth Co., 90
NLRB 289 (1950), with interest at the rate prescribed in
New Horizons, 283 NLRB 1173 (1987), compounded
daily as prescribed in Kentucky River Medical Center,
356 NLRB 6 (2010), enf. denied on other grounds sub
nom. Jackson Hospital Corp. v. NLRB, 647 F.3d 1137
(D.C. Cir. 2011).
ORDER
The National Labor Relations Board orders that the
Respondent, Smurfit-Stone Container Enterprises, Fres-
no, California, its officers, agents, successors, and as-
signs, shall
1. Cease and desist from
(a) Refusing to bargain collectively with Teamsters
District Council No. 2, Local 388-M, affiliated with In-
ternational Brotherhood of Teamsters, by demanding, as
a condition of reaching an agreement on the effects of its
decision to close the Fresno facility, that the Union con-
sent to a nonmandatory bargaining proposal.
(b) In any like or related manner interfering with, re-
straining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1738
(a) On request, bargain in good faith with the Union as
the exclusive collective-bargaining representative of the
employees in the appropriate unit, which is set forth in
section 2 of the parties’ 2005–2011 collective-bargaining
agreement, with respect to the effects of the decision to
permanently close the Fresno plant and terminate the unit
employees, and reduce to writing and sign any agreement
reached as a result of such bargaining.
(b) Pay the terminated unit employees their normal
wages for the period set forth in the remedy section of
this decision.
(c) Preserve and, within 14 days of a request, or such
additional time as the Regional Director may allow for
good cause shown, provide at a reasonable place desig-
nated by the Board or its agents, all payroll records, so-
cial security payment records, timecards, personnel rec-
ords and reports, and all other records, including an elec-
tronic copy of such records if stored in electronic form,
necessary to analyze the amount of backpay due under
the terms of this Order.
(d) Within 14 days after service by the Region, the Re-
spondent shall duplicate and mail, at its own expense and
after being signed by the Respondent’s authorized repre-
sentative, copies of the attached notice marked “Appen-
dix”43 to the Union and to all unit employees who were
employed by the Respondent at any time since Novem-
ber 21, 2008.
(e) Within 21 days after service by the Region, file
with the Regional Director a sworn certification of a re-
sponsible official on a form provided by the Region at-
testing to the steps that the Respondent has taken to
comply.

MEMBER HAYES, dissenting in part.
I dissent only from my colleagues’ determination that
the violation found warrants a Transmarine remedy,
Transmarine Navigation Corp., 170 NLRB 389 (1968),
for 92 unit employees, rather than just the four employ-
ees terminated when the Respondent’s Fresno facility
closed on September 1, 2009. Specifically, I disagree
with their view of the complaint’s allegations and the
remedy appropriate for each. Paragraph 9 of the consoli-
dated complaint alleged a separate violation for the Re-
spondent’s insistence during effects bargaining until May
4, 2009, on a proposal including the permissive subject
of early contract termination. For reasons previously
stated, I concur in finding this violation. However, the

43 If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Mailed by Order of the Na-
tional Labor Relations Board” shall read “Mailed Pursuant to a Judg-
ment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
appropriate remedy for the violation would not entail a
Transmarine remedy.
Paragraph 10 of the consolidated complaint alleged a
separate violation for terminating the final four employ-
ees when closing the facility on September 1, 2009,
without first fulfilling its obligation to bargain about the
effects of the closure. Admittedly, the General Counsel
could have pursued a remedy under this allegation for
more than the four employees terminated on September
1, but he did not do so. The complaint specifically re-
quests, as a remedy for the unfair labor practices alleged
in paragraph 10, a make whole Transmarine remedy for
unit employees employed at the time of the facility clo-
sure. I note that counsel for the General Counsel repeat-
ed this limitation on the violation alleged and remedy
requested clearly in a “Request for Administrative Ex-
penses Contingent Upon NLRB Proceeding” filed on
August 10, 2010, several months after issuance of the
judge’s decision in this case, in Chapter 11 bankruptcy
proceedings before the United States Bankruptcy Court
for the District of Delaware.
Under these circumstances, the Respondent had no no-
tice that the alleged effects bargaining violation involved
more than four employees. Contrary to my colleagues, I
would find this separate violation and provide the re-
quested limited remedy for it.1

APPENDIX
NOTICE TO EMPLOYEES
MAILED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government

The National Labor Relations Board has found that we vio-
lated Federal labor law and has ordered us to mail and obey
this notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on
your behalf
Act together with other employees for your bene-
fit and protection
Choose not to engage in any of these protected
activities.

WE WILL NOT refuse to bargain collectively with the
Union, Teamsters District Council No. 2, Local 388-M,

1 In accordance with my dissenting view in Kadouri International
Foods, Inc., 356 NLRB 1201, 1201 fn. 1 (2011), I would delete the
portion of the Transmarine remedy requiring that the minimum back-
pay due employees should not be less than 2 weeks’ pay, without re-
gard to actual losses incurred, and would limit the remedy only to those
employees who were adversely affected by the Respondent’s unlawful
action.
SMURFIT-STONE CONTAINER ENTERPRISES 1739
affiliated with International Brotherhood of Teamsters,
by demanding, as a condition of reaching an agreement
on the effects of our decision to close our Fresno facility,
that the Union consent to a nonmandatory bargaining
proposal.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
set forth above, which are guaranteed you by Section 7
of the Act.
WE WILL, on request, bargain in good faith with the
Union with respect to the effects of our decision to per-
manently close the Fresno plant and terminate the unit
employees, and WE WILL reduce to writing and sign any
agreement reached as a result of such bargaining.
WE WILL pay the 92 terminated unit employees their
normal wages for the period, with interest.

SMURFIT-STONE CONTAINER ENTERPRISES

Gary M. Connaughton, Esq., for the General Counsel.
Lawrence H. Stone, Esq. (Jackson Lewis), of Los Angeles,
California, and Robert J. Scheer, Labor Relations Counsel,
for the Respondent.
David Grabhorn, Vice President (Teamsters Disctrict Council
No. 2), of Fullerton, California, for the Union.
DECISION
STATEMENT OF THE CASE
JAY R. POLLACK, Administrative Law Judge. I heard this
case in trial at Oakland, California, on January 14, 2010. On
April 20, 2009, District Council No. 2, Local No. 388-M, affili-
ated with the International Brotherhood of Teamsters (the Un-
ion) filed the charge in Case 32–CA–024480 against Smurfit-
Stone Container Enterprises, Inc. (the Respondent). On Sep-
tember 16, 2009, the Union filed the charge in Case 32–CA–
024725. On October 29, 2009, the Regional Director for Re-
gion 32 of the National Labor Relations Board (the Board)
issued a complaint and notice of hearing against Respondent,
alleging that Respondent violated Section 8(a)(5) and (1) of the
Act. Respondent filed a timely answer to the complaint, deny-
ing all wrongdoing.
The parties have been afforded full opportunity to appear, to
introduce relevant evidence, to examine and cross-examine
witnesses, and to file briefs. On the entire record, from my
observation of the demeanor of the witnesses, and having con-
sidered the posthearing briefs of the parties, I make the follow-
ing
FINDINGS OF FACT
I. JURISDICTION
The Respondent is a Delaware corporation with an office and
principal place of business in Fresno, California, where it has
been engaged in the manufacture and nonretail distribution of
corrugated boxes. In the 12 months prior to issuance of the
complaint, Respondent, in conducting its business operations,
sold and shipped goods valued in excess of $50,00 directly to
customers who themselves meet one of the Board’s jurisdic-
tional standards, other than the indirect inflow or indirect out-
flow standards. Accordingly, Respondent admits, and I find
that, Respondent is an employer engaged in commerce within
the meaning of Section 2(2), (6), and (7) of the Act.
The Respondent admits, and I find that, the Union is a labor
organization within the meaning of Section 2(5) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
Respondent was engaged in the manufacture and nonretail
distribution of corrugated boxes at its Fresno, California facili-
ty. The Union has represented production and maintenance
employees at this facility for many years. The most recent
collective-bargaining agreement between the parties was effec-
tive by its terms from March 1, 2005, to February 28, 2011. As
of September 28, 2008, Respondent employed 92 employees in
the bargaining unit.
On September 25, 2008, Respondent notified the Union that
it intended to cease production and lay off all bargaining unit
employees commencing on or after November 28, 2008. Be-
tween September 26, 2008, and May 4, 2009, the Union and
Respondent engaged in bargaining over the effects of Respond-
ent’s decision to permanently close its facility and lay off bar-
gaining unit employees. At the first bargaining session, on Sep-
tember 26, 2008, Respondent informed the Union that October
2009 was the target date for closing of the plant and laying off
all employees. At the second bargaining session, on November
21, 2008, Respondent informed the Union that although Octo-
ber 2009 was still the closing date some bargaining unit em-
ployees might continue to work in the warehouse beyond that
date.
The parties met on six occasions: September 26, November
21, and December 10, 2008, and January 6, March 24, and
April 1, 2009. As background, the parties had negotiated a
closure agreement for Respondent’s San Jose facility in 2004.
That closure agreement featured four fundamental concepts: (1)
the collective-bargaining agreement would terminate before its
actual termination date; (2) seniority would be suspended in
exchange for; (3) Respondent would provide severance pay for
employees; and (4) Respondent would continue medical bene-
fits for employees. The provision providing for early termina-
tion of the contract stated:

The Current Collective Bargaining Agreement dated June 16,
1998-June 15, 2004 between the parties shall remain in full
force and effect under terms of this Termination Agreement
until all operations cease and the Plant closes or no bargaining
unit employee remains, whichever is later at which time the
Collective Bargaining Agreement will be considered null and
void at this facility.

In the March 2005 collective-bargaining agreement for the
Fresno facility, the Union sought a formula for severance pay.
Respondent rejected that proposal. Instead, Respondent recog-
nized “the right of the Union to discuss severance pay in case
of permanent plant closing for economic reasons and not for
reasons such as labor disputes, Acts of God, War, etc.” The
parties agreed that Respondent would “bargain a sever-
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD 1740
ance/impact bargaining formula that is not inconsistent with its
severance/impact bargaining agreement at San Jose (January
2003).”
Throughout the bargaining sessions regarding closure of the
Fresno facility, Respondent proposed that the current bargain-
ing agreement terminate if, and when the unit was reduced to a
certain number of employees. Respondent originally proposed
that the bargaining agreement terminate if, and when the num-
ber of employees reached five. Respondent later reduced that
number to three and, finally to one or fewer in its last offer of
April 1, 2009. The Union maintained that it would not agree to
terminate the bargaining agreement while any employees were
still employed at the facility. Respondent, through its spokes-
man, indicated that there would be no severance agreement
without early termination of the contract.
At the first bargaining session, held on September 26, 2008,
Respondent proposed that seniority be suspended effective the
date of the supplemental agreement. It also proposed a sever-
ance formula, consistent with the San Jose Agreement, of 1
week for each full year of service. Respondent proposed con-
tinuance of medical benefits for 4 months and then COBRA
continuation. Finally, Respondent proposed early termination
of the collective-bargaining agreement if, and when the remain-
ing bargaining unit employees numbered five (5) or fewer.
Respondent made it clear that the number of employees re-
quired to effect termination of the bargaining agreement was
variable and subject to improvement.
On November 21, 2008, the Union made its proposal which
called for the following: two weeks of severance pay for each
year of service, four additional months of payments of health
insurance, and the continuation, rather than suspension of sen-
iority. The Union proposed that the Bargaining Agreement
continue until its expiration date. Respondent changed its pro-
posed closing date to January 31, 2009.
On December 10, 2008, the parties again bargained over the
effects of the plant closure. The Union reduced its demand for
severance pay from 2 weeks to 1 week for each year of service.
The Union announced that it would not agree to early termina-
tion of the bargaining agreement, and that it would file unfair
labor practice charges.
On January 6, 2009, Respondent proposed early termination
of the bargaining agreement when the number of bargaining
unit employees reached three or fewer. Prior to the parties’
next meeting, Respondent filed for bankruptcy. On January 23,
2009, the Union proposed that Respondent implement the San
Jose closure agreement.
On March 24, 2009, Respondent proposed that “certain
warehouse employees, presently four in number, will continue
to work . . . but this is not to be misconstrued as a guarantee of
either crew size or duration of employment.” Respondent pro-
posed that the bargaining agreement terminate when the num-
ber of unit employees reached three or fewer. Respondent indi-
cated that it was “flexible about the number of employees in-
volved when the workforce is reduced to three employees, but
insisted that the current agreement expire while there were still
some employees working.” The Union rejected Respondent’s
proposal.
The Union asked for Respondent’s last, best, and final offer
on April 1, 2009. On April 1, Respondent presented its last,
best, and final offer, which included early termination of the
contract when the number of bargaining unit employees
reached one or fewer. On April 17, the Union sent Respondent
a counter proposal, which consisted of Respondent’s last, best,
and final offer with all the provisions the Union did not accept,
lined out, including the early termination proposal. On April
23, Respondent rejected the Union’s proposal and again offered
its last proposal. On May 5, Respondent withdrew its final
proposal. The Union did not request further bargaining. No
further bargaining took place and on September 1, 2009, the
Fresno plant was closed and the remaining four employees
were laid off.
Within this factual framework, the General Counsel alleges
that Respondent unlawfully insisted to impasse on a permissive
subject of bargaining. Respondent denies that the parties
reached impasse. Further, Respondent argues that the permis-
sive subject of bargaining was inextricably linked to mandatory
subjects of bargaining.
III. ANALYSIS AND CONCLUSIONS
An employer is entitled to close its business purely for eco-
nomic reasons without having a duty to bargain over the deci-
sion under the Act. First Nat’l Maintenance Corp. v. NLRB,
452 U.S. 666, 686 (1981). An employer, however, must pro-
vide the union the opportunity to bargain over the “effects” of
the decision.
The General Counsel contends that Respondent insisted to
impasse on a permissive subject of bargaining. In order for a
subject of bargaining to be considered mandatory, the issue
must bare a “direct, significant relationship to . . . terms or con-
ditions of employment,” rather than a “remote or incidental
relationship.” NLRB v. Massachusetts Nurses Assn., 557 F.2d
894, 898 (1st Cir. 1977). With respect to mandatory subjects,
neither party is legally obligated to yield” but with respect to
permissive subjects “each party is free to bargain or not to bar-
gain, and to agree or not to agree.” Borg-Warner Corp., 356
U.S. 342, 349 (1958). Accompanying this distinction is the
principle that “neither a union nor an employer is permitted to
force a bargaining deadlock over the inclusion of a term cover-
ing a permissive subject of bargaining.” Inland Tugs v. NLRB,
918 F.2d 1299, 1308 (7th Cir. 1990), citing Borg-Warner
Corp., 356 U.S. 342 (1958). Insisting upon acceptance of a
permissive or nonmandatory subject to the point of impasse
constitutes a violation of Section 8(a)(5) and (1) of the Act.
Pleasant View Nursing Home Inc., 351 F.3d 747 (6th Cir.
2003).
Respondent’s proposal for early termination of the contract
was a permissive subject of bargaining. Respondent sought to
modify the existing term of the collective bargaining agree-
ment. The Union did not have to bargain over that proposal
and Respondent could not insist to impasse on that subject.
Respondent contends that the proposal for early termination
of the bargaining agreement was inextricably intertwined with,
and inseparable from the other proposals in the closing agree-
ment. Under certain circumstances a permissive subject can be
as “intertwined with and inseparable from the mandatory terms
SMURFIT-STONE CONTAINER ENTERPRISES 1741
and conditions . . . as to take on the characteristics of the man-
datory subjects themselves.’’ Sea Bay Manor Home for Adults,
253 NLRB 739, 740 (1980), enfd. 685 F.2d 425 (2d Cir. 1982).
In Dependable Storage Inc., 328 NLRB 44 (1999), the
Judge, with Board approval, found that there was no legal im-
pediment to the linking of mandatory and nonmandatory, or
permissive subjects of bargaining, so long as the inclusion of
the permissive subject was not a device to circumvent the gen-
eral rule that one may not insist on such a provision to im-
passe.1 In the instant case, Respondent was offering the contin-
uation of medical benefits and severance pay only on the condi-
tion that the Union agrees to early termination of the contract.
The early termination of the collective-bargaining agreement
was part of a package that included continuation of medical
benefits, severance pay, suspension of seniority, and early ter-
mination of the contract. Respondent would not grant the bene-
fits if employees retained recall rights. This principle was part-
and-parcel of the San Jose closure agreement. At the time the
collective-bargaining agreement was reached, the parties agreed
that Respondent would not act inconsistent with the San Jose
agreement, if there was to be a plant closure. In the instant
case, early termination of the collective-bargaining agreement
and suspension of seniority were consideration for severance
pay and continued medical benefits. These proposals were part
of a package and took on the characteristics of the mandatory
subjects. Therefore, I find no violation in Respondent’s linking
of these proposals.
Should reviewing authority disagree, I next treat the question
of impasse. Impasse has been defined as “that point at which
the parties have exhausted the prospects of concluding an
agreement and further discussion would be fruitless.” Laborers
Health & Welfare Trust Fund for Northern California v. Ad-
vanced Lightweight Concrete Co., 484 U.S. 539, 543 (1988).

1 The judge cited Nordstrom, Inc., 229 NLRB 601 (1977), and Tor-
rington Industries, 307 NLRB 809, 812 (1992).
In Taft Broadcasting Co., 163 NLRB 475 (1967), the Board
stated:

Whether a bargaining impasse exists is a matter of judgment.
The bargaining history, the good faith of the parties in negoti-
ation, the length of the negotiations, the importance of the is-
sue or issues as to which there is disagreement, the contempo-
raneous understanding of the parties as to the state of negotia-
tions are all relevant factors to be considered in deciding
whether an impasse in bargaining existed.

Here, the importance of the issue of early termination of the
contract would point to impasse. However, Respondent had
made concessions on this point. While the Union was taking
the position that the parties were at impasse, Respondent did
not take such a position. Respondent was always willing to
bargain. For impasse to occur, neither side must be willing to
compromise. Grinnell Fire Protection Systems Co., 328 NLRB
585 (1999), enfd. 236 F.3d 187 (4th Cir. 2000), citing PCR
Recording Co., 280 NLRB 615, 640 (1986), enfd. 836 F.2d 289
(7th Cir. 1987). Based on the history of the bargaining, and
Respondent’s concessions and willingness to bargain, I find
impasse had not yet been reached.
Under all of the circumstances, I find that Respondent did
not insist to impasse on a nonmandatory subject of bargaining.
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in commerce and in a
business affecting commerce within the meaning of Section
2(6) and (7) of the Act.
2. The Union is a labor organization within the meaning of
Section 2(5) of the Act.
3. Respondent did not violate Section 8(a)(5) and (1) of the
Act within the meaning of Section 2(6) and (7) of the Act.
[Recommended Order for dismissal omitted from publica-
tion]