Before: Williams, Henderson and Tatel, Circuit Judges.
FOR THE DISTRICT OF COLUMBIA CIRCUIT
On Petition for Review of an Order of the National Labor Relations Board
Opinion for the Court filed by Circuit Judge Williams.
After transferring certain employees from one corporate division to another, McDonnell Douglas reclassified them out of a bargaining unit represented by Southern California Professional Engineering Association ("SCPEA" or the "union"), invoking its 1987 collective bargaining agreement and later elaborations of the agreement as support for both the procedure and the substance of the decision. The union charged the company with committing an unfair labor practice in the form of unilaterally altering the scope of a bargaining unit. The company defended on two grounds, either of which-the company and the National Labor Relations Board both agree-would be a complete defense. The company's first defense was that it had acted with union consent, by virtue of the collective bargaining agreement and its later refinements. Its alternative defense was that the reclassification was consistent with national labor law standards governing the proper scope of a bargaining unit.
The administrative law judge hearing the case found the reclassification issue well suited to resolution through the grievance and arbitration procedures established by the parties' collective bargaining agreement and declined to adjudicate the merits of the charge. On the union's petition, the Board reversed, explaining that the case could not be deferred to arbitration because it presented a "representation issue", which, it said, is a kind of issue that cannot be settled in arbitration. On the merits, the Board found an unfair labor practice, concluding that the union had not consented to the employees' removal from the unit and rejecting the company's alternative defense that the reclassification was proper under the labor laws. McDonnell Douglas Corporation, 312 NLRB 373 (1993), reh'g denied, 313 NLRB 868 (1994). McDonnell Douglas now petitions for review of the Board's decision, and the Board cross-applies for enforcement.
Although the Board has discretion to choose whether to defer to arbitration, it has purported to exercise that discretion consistent with a policy, viz., it defers to arbitration in cases in which the contract settles the issue. In explaining its decision not to defer here, however, it cited no decision in which a party's contractual consent could potentially have been dispositive but instead invoked ones where extra-contractual principles or interests were plainly at stake. We find its explanation for departing from its general policy of deferring to arbitration wholly inscrutable. Accordingly, we remand the case to the Board for it to reconsider the issue of deferral to arbitration, and we do not reach the merits of the unfair labor practice charge.
The facts are not in dispute. SCPEA represented more than 6000 McDonnell Douglas employees under a single collective bargaining agreement covering the period from 1987 to 1990. Before the transfer, the 32 engineers at issue here were employees of a division known as McDonnell Douglas Aerospace Information Services Company ("Information Services"). Among its other functions, Information Services "leased" pools of computer and engineering professionals to other McDonnell Douglas divisions. These 32 were leased to McDonnell Douglas Astronautics CompanyHuntington Beach ("Astronautics"), where they worked side by side with Astronautics engineers developing embedded system software. Their work was essentially identical to that of their Astronautics counterparts, except that they reported ultimately to Information Services administrative supervisors, and their compensation, discipline, and career paths were set by Information Services.
During late 1988, the company decided to decentralize its operations. As part of the reorganization, it divided Astronautics by function into two new divisions, McDonnell Douglas Space Systems Company and McDonnell Douglas Electronic Systems Company ("Electronic Systems"); it also dissolved the Information Services labor pools and reassigned those workers to work directly for the divisions to which they had been leased. The function the 32 engineers had been performing was now handled by Electronic Systems. Thus, as part of the reorganization, the 32 (along with their former Astronautics counterparts) were transferred to Electronic Systems. While they continued doing the same work they had been doing for Astronautics as Information Services employees, they began, along with their former Astronautics counterparts (who were non-unit employees), reporting only to Electronic Systems supervisors. At this point, McDonnell Douglas reclassified the 32 as outside the unit.
The union did not object to the engineers' transfer to Electronic Systems but vigorously opposed their reclassification, complaining to the NLRB that by ceasing to recognize the union as these employees' representative the company had unilaterally altered the scope of the unit in violation of Section(s) 8(a)(5) and (1) of the National Labor Relations Act. See 29 U.S.C. Section(s) 158(a)(5), (a)(1); Int'l Union of Elec., Radio & Mach. Workers, AFL-CIO-CLC v. NLRB, 604 F.2d 689, 696 & n.21 (D.C. Cir. 1979) (unit scope is a "permissive" subject of bargaining; therefore, employer who refuses to bargain with appropriate unit violates 8(a)(1) and (5) of the NLRA). In defense, the company insisted that it had not altered the scope of the unit at all; it had simply, consistently with its rights under the 1987 collective bargaining agreement and later elaborations, transferred these employees (among numerous others) to a new division and classified them consistently with their new positions in light of those agreements. Cf. NLRB v. Greensburg Coca-Cola Bottling Co., Inc., 40 F.3d 669 (3d Cir. 1994) (holding that company, by insisting that bargaining agreement's recognition clause did not extend to part-time employees, had not "attempt[ed] to alter the bargaining unit but rather merely advanced its interpretation of the contractual language" and noting that "interpretation of the scope of the recognition clause" could be resolved in arbitration).
The 1987 collective bargaining agreement set forth the parties' understanding of the scope of the union's representation, *fn1 defining it by reference in part to the company's component divisions, in part to the type of work being done. Before the reorganization, all Information Services computer engineers, regardless of the type of work they did, had been classified as unit employees; employees of Astronautics, on the other hand, had been classified as unit or non-unit depending on the kind of work they did. Of course, disputes about the application of the classification scheme to particular work or particular employees had occasionally arisen. In October 1988 the union and the company had settled one such dispute by means of an ancillary agreement, which the parties refer to as the "Embedded System Software Agreement" or "ESSA".
Among other things, the ESSA stated that from then on Astronautics employees who worked in specified phases of embedded systems software development ...