Omahaline Hydraulics Co.

National Labor Relations Board - Administrative Judge Opinions

Mar 18, 2003

18-CA-016552 (N.L.R.B. Mar. 18, 2003)

JD–16—03
Sioux City, IA

UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES

OMAHALINE HYDRAULICS COMPANY, a
division of PRINCE MANUFACTURING
COMPANY

and Case 18—CA—16552

DISTRICT NO. 7, INTERNATIONAL
ASSOCIATION OF MACHINISTS &
AEROSPACE WORKERS, AFL-CIO

Joseph H. Bornong, Esq., for the General Counsel.
Frank B. Wolfe, III, Esq., of Tulsa, Oklahoma,
for the Respondent.
Roger N. Nauyalis, of Westchester, Illinois,
for the Charging Party.

DECISION

Statement of the Case

PAUL BUXBAUM, Administrative Law Judge. This case was tried in Sioux City, Iowa, on
December 16 and 17, 2002. The original charge was filed August 15, 2002, and amended
charges were filed October 23 and 29. The complaint was issued October 30.

The complaint alleges that the Company discharged 28 of its employees because those
employees engaged in protected, concerted activities, including a strike. It is further alleged
that this conduct violated Section 8(a)(1) and (3) of the Act. The Company filed an answer
denying the material allegations of the complaint.

On the entire record,1 including my observation of the demeanor of the witnesses, and
after considering the briefs filed by the General Counsel and the Respondent, I make the
following

Findings of Fact

I. Jurisdiction

The Company, a corporation, manufactures hydraulic pumps and motors at its facility in
North Sioux City, South Dakota, where it annually sells and ships from its North Sioux City,
1 There are minor errors in the transcript. At p. 92, ll. 1—5, the printing is misaligned,
obscuring some testimony. The missing testimony is not dispositive as to any material issue.
At p. 133, l. 9, the reference should be to Mr. Bornong, not Mr. Wolfe. At p. 152, l. 17, I am
quoted as saying “legality.” I actually said “reality.” At p. 246, l. 6, I am quoted as discussing
“substantial equipment.” I was referring to “substantial equivalence.”

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South Dakota facility goods valued in excess of $50,000 directly to points outside the State of
South Dakota. The Company admits2 and I find that it is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act and that the Union is a labor
organization within the meaning of Section 2(5) of the Act.

II. Alleged Unfair Labor Practices

A. The Company’s Operations Before the Strike and Reconfiguration

Omahaline Hydraulics Company is a division of Prince Manufacturing Corporation, a
South Dakota corporation. Its facility is located in North Sioux City, next to Prince’s
headquarters. The facility covers approximately 40,000 square feet.

Omahaline’s general manager is Lynn Dumas. Dumas began his career with Prince
Manufacturing as a lathe operator. Eventually, he became an industrial engineering department
manager and general manager of a division. In October 1999, Dumas was appointed as
general manager of Omahaline.

At the time of Dumas’ appointment, Omahaline manufactured welded hydraulic
cylinders, hydraulic pumps, and hydraulic motors. There were 105 machines used in the
manufacturing process. Dumas described the facility as cramped, noting that over 100
machines were “jammed” into the building. (Tr. 57.)

The Company had 70 production employees classified into 7 job categories. By far the
largest category was for “machinists.” These employees performed three job functions, welding,
machine operating, and assembling. Dumas testified that the people performing these functions
were grouped as machinists for “payroll” purposes. (Tr. 157—158.) He defined the meaning of
the term in the Company’s usage as “a general term for all those that were involved in
production—direct labor production.” (Tr. 158.)

The Company’s production operations were organized into 22 cells. Each cell contained
a number of machines and associated equipment. Machinists were assigned to specific cells.
For example, Dumas testified that two machinists were assigned to the PUMPM cell. One
employee operated three machines, while the other operated six machines. These two
employees did not have regular responsibilities in any other cell.3

If a job in a particular cell became vacant, the Company would fill it by a process of
bidding. The Company would post a list of such vacancies and all current employees were
eligible to bid for them.4 Employees who performed the same job on another shift were given
first priority. If no such employees applied, the position would be filled from any other current
employees who sought the job. This included machinists and any other categories of
employees. Only if no current employees were interested would the Company fill the job from
outside the existing work force. If more than one employee bid for an opening, management
would select the more qualified candidate. Since all of the Company’s production jobs were
2 See: Answer, par. 2 and 3. (GC Exh. 1g.)
3 Dumas described the operations in various other cells. In each case, employees operated
various numbers of assigned machines within their cell, but did not have regular responsibilities
outside that cell.
4 The record contains examples of the paperwork associated with the bidding process. (R.
Exhs. 7 and 8.)

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compensated at the same rate of pay,5 Dumas testified that employees would bid on vacancies
“to become more valuable to the company and for themselves for self-improvement to have
more skills.” (Tr. 69.) Once an employee won a bid for a new position, he received on-the-job
training from another employee who was already skilled in the work process. Dumas testified
that nobody had ever failed to learn a new job through this training process.

Although employees were assigned to specific jobs that had been awarded through the
system of bidding, the actual production process was considerably more flexible. Two
production employees, Toni Loker and Harley Van Kirk, were called to testify.6 Each described
this flexibility in actual practice. Loker testified that approximately once a month she would be
assigned to operate a machine outside her regular job. This would happen when the normal
operator of that machine “was gone or if the individual had a lot of testing to do. It would help
keep the flow going.” (Tr. 232.) Such brief assignments would last for periods from a few hours
to a full shift. In addition, there were longer temporary reassignments. These would occur
when an employee was on vacation or when equipment in her own cell was in need of repair.
This could also occur if there was need for a specific type of part. Such reassignments would
last from a day to a week at a time. Loker, a very experienced employee, reported that she
received such reassignments approximately every 2 weeks. During the final 6-month period of
her active employment, she performed such work in nine different cells.

Van Kirk, a less experienced employee, testified that during this period he was assigned
to temporary jobs approximately once a month. Typically, such reassignments would last for a
day.

Dumas corroborated the existence of the practice of temporary assignments. In an
affidavit, he reported that the machinists were “interchangeable” and that “generally” machinists
were cross-trained so as to be able to perform a number of functions. (Tr. 162, 164.)
In his trial testimony, he agreed that “most” employees received temporary assignments when
fellow workers were ill or on leave. (Tr. 154—155.) In fact, there is evidence that the Company
prized the ability to deploy its work force in a flexible manner. Dumas testified that during
negotiations, the Union wanted to limit such flexibility. He reported that

the [C]ompany’s position is that they needed to be interchangeable.
That we need to make certain that we have the flexibility to assign
people where needed.

(Tr. 197.)7 Describing the Company’s need to move workers around, Dumas summarized by
noting that “we use[d] them where we need[ed] them.” (Tr. 187.) In addition to employees
categorized as machinists, the Company employed smaller numbers of people in job categories
described as materials transfer, maintenance, IRO, shipping/receiving, and ISO/QC. These
employees were paid at the same rate as machinists and were authorized to bid for vacant
machinist jobs if they so desired.

Approximately 6 months after Dumas’ transfer to Omahaline, the Company experienced
5 Indeed, Dumas testified that jobs operating very complex machines were paid at the same
rate as jobs involving very simple machines.
6 The Company called Van Kirk, a nonstriking employee. The General Counsel called
Loker, a participant in the strike.
7 Dumas reported that these negotiations involved the period prior to the Company’s
reconfiguration in July 2001.

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a large increase in orders for cylinders. As a result, Dumas hired 16 new employees in a
relatively brief period. The new hiring, combined with shifting of existing employees to new
positions, resulted in the need for a “tremendous” amount of training. (Tr. 97.) Around this time,
in July 2000, the Union became the representative of the Company’s production employees.

Unfortunately, the rapid expansion of the Company’s work force caused quality control
problems. Dumas characterized the quality of the Company’s cylinders as “atrocious.” (Tr. 98.)
Inexorably, these difficulties led to dissatisfaction among the customers. In February 2001,
Kubota, a major client, greatly reduced its order for cylinders. As a result of the reduced
demand, the Company terminated 14 employees. In order to select the employees who would
be terminated, the Company devised a sophisticated assessment tool. (GC Exh. 8.) This
spread sheet rated every employee, using a number of selection criteria assessing attendance,
number of machines the employee could operate, number of rejected products, possession of
specific skills and record of disciplinary problems. The same rating scale was used for all
employees, regardless of their job category and regardless of whether they manufactured
cylinders, pumps, or motors. An overall numerical rating was calculated and the 14 employees
with the lowest overall ratings were selected for termination.8 Dumas testified that the Company
had no policy or past practice of according such terminated employees any “lay-off status” or
recall rights. (Tr. 38.)

After these terminations, the Company’s problems with cylinder production persisted,
leading to the loss of another major customer, Terex. As a result, on May 2, 2001, the
Company decided to terminate an additional 20 employees. The Company notified the Union of
this decision and offered to negotiate “the criteria for selecting the list of twenty and the effects
of that reduction in force.” (Tr. 39.)

On the next day, May 3, 2001, the Union called a strike. Dumas’ uncontroverted
description of the nature of this strike was as an “economic strike over seniority.” (Tr. 40.) A
total of 34 employees participated in the strike.

Approximately 7 weeks into the strike, on June 21, 2001, the Company notified the
Union that it was transferring its cylinder production to Prince’s divisions in Sioux City and
Yankton.9 At trial, Dumas was asked to explain the rationale for this decision. He described it
as follows.

The opportunity of taking advantage of the time--of the
timing of the change to not penalize customers on
deliveries because of the downturn in cylinder business
and the available space at the other two production
facilities and the restriction of space in our facility.

(Tr. 42.) The Company offered to negotiate the effects of the transfer of cylinder production, but
declined to negotiate the transfer itself. Dumas testified that since the reason for the transfer
was due to a “space problem” and since the Union couldn’t “offer me more space,” there was no
requirement for such negotiations. (Tr. 43.)

8 The name of each employee selected for termination is surrounded by a box on the
assessment spread sheet. (GC Exh. 8.)
9 The Union represents the employees in the Sioux City division. The employees in Yankton
are unrepresented.

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Immediately upon notification of the transfer decision, the Union made a request for
information related to the transfer. On June 29, the Company provided some of the requested
information. On July 3, the Company ceased cylinder production at the facility and began
removing cylinder production equipment in order to transfer it to the other divisions.

B. The Company’s Reconfiguration and the Termination of the Strikers

On July 11, 2001, Dumas began attending a 4-day course on Demand Flow Technology.
After finishing this course, he decided to adopt this method at Omahaline. Implementation of
this conversion began immediately. This included reconfiguration of the production process and
training of the nonstriking employees.

At the end of July, the Company provided additional information to the Union in response
to the Union’s earlier request for cylinder transfer information. Being dissatisfied with the
information provided, the Union filed an unfair labor practice charge on August 3. (R. Exh. 1.)
After investigation of this charge, the Regional Director responded to the Union by letter dated
October 30, 2001. The Regional Director concluded that

the evidence established that the Employer’s decision to transfer
all its cylinder production was a change in the nature and scope
of its business and was not a mandatory subject of bargaining for
which the Employer would have been obligated to provide information.

(R. Exh. 2.) He concluded that the transfer decision was based on underutilized capacity at the
Sioux City and Yankton divisions. Noting that the Sioux City division was a union shop, he
observed that “there is no evidence that a motivating factor for the transfer is the strike at the
Employer’s facility.” As a result, he refused to issue a complaint.10

In February 2002, the Company provided the Union with notice that the discontinuation
of cylinder production at Omahaline would result in permanent elimination of some jobs. This
was followed by a letter from Dumas dated July 15, advising that terminated employees would
be notified by letter on July 31. Dumas opined that “permanent elimination of the strikers’ jobs
was a natural consequence of the discontinuation of cylinder production and has long been a
fait accompli.” He asserted that the strikers have “no prospects” of returning to work. (R. Exh.
3.) Four days later, the Company “went line live” with Demand Flow Technology. (GC Exhs. 3
and 4.) And, 4 days after that, the Union responded to Dumas’ notification of the upcoming
termination of strikers by informing the Company that it believed that the Company had “no legal
basis” for terminating the strikers and that such an action would result in the filing of an unfair
labor practice charge. (R. Exh. 4.)

As planned, on July 31, 2002, the Company mailed termination letters to its striking
employees.11 Each recipient was told that:

Even if you decided to abandon the strike today, or in the fore-
seeable future, there would not be a single open job for you to
10 The Regional Director’s position has been consistent throughout these proceedings.
There has been no contention that the Company’s decision to transfer cylinder production was
not based on legitimate and substantial business reasons.
11 A list of the names of these employees may be found at GC Exh. 5. Each of the 28
employees named in the complaint were sent this termination letter.

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return. No additional positions will be created in the future.

(GC Exh. 4.)12 The letter informed the employees that their termination was effective on July
31, 2002. They were also advised that their 401(k) funds “may be subject to special rules due
to your termination.” It was suggested that questions about these funds could be directed to the
401(k) administrator.

Dumas testified that the July 31 terminations were not based on selection criteria of the
type employed in February 2001. The only selection criterion was the fact that the terminated
workers were participating in the strike. Dumas affirmed this reality, albeit reluctantly, during the
following exchange during his cross-examination:

Q: The only selection criteria at that point was the fact they
were on strike, was it not?

A: No, it wasn’t the selection criteria.

Q: Isn’t that how it--isn’t that the only thing that determined
whether you were laid-off or not laid-off, terminated or
not terminated in that decision? Whether you were on
strike or not?

A: I’m sorry, ask the question again.

Q: Wasn’t--isn’t the only distinction between those terminated
and those not terminated the fact that the terminated were
strikers?

A: You could make that distinction, yes.

Q: So the only selection criteria was the fact that they were on
strike, isn’t it?

A: There was no selection criteria applied.

Q: Well, I think that’s good enough.

(Tr. 193.) On August 15, the Union filed the original unfair labor practice under consideration in
this case. (GC Exh. 1a.)

On September 13, 2002, the Union wrote to Dumas, advising him that it was ending
its strike. Acting on behalf of the strikers, the Union’s letter contained an unconditional offer to
return to work. It also made the following demand:

In the event there is no work for some of these employees
at this time, on their behalf, I am requesting that each of the
employees who are not recalled on this date be placed on a
preferential list to be recalled as soon as opening[s] become
12 This exhibit is the termination letter addressed to one particular employee. All the letters
were identical.

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available.

(GC Exh. 6.) Dumas testified that he received this letter. He responded on October 3,
informing the Union that there were no prospects for work for any of the strikers. As a result, he
asserted that “requests for recall and placement on a preferential hiring list have no merit in law
or logic.” Paradoxically, he went on to tell the Union that the Company intended to negotiate
with the Union prior to any further layoffs and that the Company “will propose layoff and recall
rights” for such employees. (GC Exh. 7.)

C. Delineation of the Issue

On October 30, the General Counsel issued the complaint and notice of hearing in this
case. (GC Exh. 1e.) The complaint alleges that the Company discharged the named
employees due to their union membership and activities, particularly their participation in the
strike. At the commencement of the trial, counsel for the General Counsel further framed the
issue as follows:

[W]e recognize that at this point there are no jobs open
for the strikers to return so we are seeking basically a
creation of a preferential recall list as established by the
Board in the Laidlaw case13 and we would, however, like to
have the notice and the remedy include a make-whole
provision.

(Tr. 12.) The reference to a make-whole remedy refers to the possibility that an affected
employee had “acted on that termination notice and lost something as a result,” specifically
vacation pay or any adverse impact on the employee’s 401(k) plan. (Tr. 12.) Counsel for the
General Counsel suggested that, in the event the General Counsel prevailed, the specifics of
the make-whole issue could be addressed at the compliance stage of the proceedings.

Because the General Counsel’s prayer for relief appeared to be significantly less broad
than the nature of the relief sought in other cases alleging unlawful discharge of employees, I
returned to this subject at the conclusion of the trial. I described my understanding of the key
remedial issue by asking if

the General Counsel’s theory of this case is that when the
[C]ompany terminated these employees who were out on
strike, it violated their Section 7 rights because it has
refused to accord them any sort of preferential reinstatement
rights when the [C]ompany decides to hire new employees?

(Tr. 244.) Counsel for the General Counsel’s succinct response was “Right. That’s the long
and short of it, Your Honor. Yes.” (Tr. 244.) He went on to observe that “we think what they
should have done instead is make a preferential recall list.”14 (Tr. 245.)

The Company’s primary defense is clearly set forth in its answer.15 It’s argument begins
Continued
13 Laidlaw Corp., 171 NLRB 1366 (1968).
14 Counsel for the General Counsel also stated that, as of the date of trial, there was no
backpay obligation since the Company has not hired any employees.
15 In its answer to the complaint, the Company also raised an issue of res judicata,

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_________________________
with the contention that:

When the jobs of nonreplaced economic strikers are
eliminated for legitimate, substantial and nondiscriminatory
business reasons, and there were not, are not now, and
will not be any substantially equivalent jobs to which they
could be reinstated, there is no appropriate relief which can
be granted under the Act to those strikers who have been
terminated.

(GC Exh. 1g, Answer, par. VII.) This argument is amplified as follows:

The General Counsel is attempting, through the Complaint,
to impose on the Respondent an obligation to grant indefinite
preferential reinstatement rights to former nonreplaced
economic strikers, whose jobs have been permanently
eliminated, to vacancies that may occur in the unforeseeable
future for which the economic strikers may be unqualified, or
substantially less qualified than available new hires, where
such reinstatement rights are not required by the Act.

(GC Exh. 1g, Answer, par. X.)

In order to evaluate the parties’ positions, it is first necessary to undertake careful
analysis of the Company’s reconfiguration of its operations through the adoption of Demand
Flow Technology.

D. The Demand Flow Technology Process

Dumas was the Company’s primary witness regarding the nature and impact of the
conversion to Demand Flow Technology. He testified that the Company had been using a
traditional material requirements planning system. This system launched production orders
based on projection of future demand. Once an order was launched, it was pushed through the
production process. Van Kirk described the effects of this system. He reported that the
Company would manufacture and stockpile large numbers of parts. The parts would then sit in
storage until needed for assembly.

A concomitant of the prior method of organizing production was the manner in which the
work force was deployed. Dumas testified that machinists were “narrow in their approach to the
machines they ran on a daily basis.” (Tr. 19.) Dumas also indicated that under this system,
after setting up their machine, machinists spent considerable time simply watching it run.
contending that the complaint is barred by the findings made by the Regional Director in his
letter of October 30, 2001, declining to file a complaint in response to the Union’s charge
alleging an unlawful refusal to provide information regarding the transfer of cylinder production.
(GC Exh. 1g, par. IX.) The Company cited no authority for this proposition and did not address it
in its post trial brief. Assuming, arguendo, that the Regional Director could be bound by
application of the doctrine of res judicata, it is inappropriate to do so here. Nothing in the
Regional Director’s letter addresses the issue of preferential recall of strikers. Furthermore, the
General Counsel’s position throughout this trial has been completely consistent with the findings
and conclusions expressed by the Regional Director in his letter.

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Dumas enthusiastically described the new process as pulling the work through the
manufacturing process by carefully managing the work organization and flow. Workers
engaged in visual control of production by moving from place to place as they observed
locations where work needed to be performed. This resulted in an operation where parts moved
from process to process without being stored in between manufacturing stages. As a result, the
Company is able to produce its products using fewer workers at a faster rate while using “less of
the machine resources.” (Tr. 50.) Inventory is reduced and the plant is more efficient.
Furthermore, directly addressing a key issue in the past, Dumas testified that quality of the
product has been improved “tenfold.” (Tr. 98.) Finally, Dumas noted that the removal of
cylinder production opened up a large amount of space in the facility. This allowed the
machines to be “reconfigured, reorganized, regrouped.” (Tr. 66.) This contributed to increased
efficiency.

The requirements of the Demand Flow system affected the nature of the employees’
jobs. Dumas described the fundamental nature of these changes by noting that the “job today is
to know every machine in this plant, to be a flexible employee to be used wherever needed.”
(Tr. 77—78.) Part of this requirement is the concept of flexing. Each work assignment includes
a primary cell and the obligation to perform additional production work in other cells immediately
before and after the primary cell’s position in the production process.

Dumas provided several examples of how the work process has changed under
Demand Flow. He characterized the job in the PPL Cell as “totally changed.” (Tr. 102.) The
machines are arranged differently and the operator needs to deploy more skill and effort since
he or she must cover “more real estate.” (Tr. 102.) In addition to running the primary (or
“pacing”) machine, the operator must manage and control parts produced by other machines as
well. The Grind Cell was cited as another illustration. This cell uses the same machines as
previously, but the lot sizes of the parts have decreased dramatically so that the operator must
perform “many more setups than ever done before.” (Tr. 121.) Thus, Dumas summarized the
impact on this cell as:

Even though it’s physically arranged like it was before and the
machines haven’t changed[,] the responsibility and effort and
skill this operator has is greatly enhanced over what it used to
be.

(Tr. 122.)

Another example cited by Dumas concerned an employee, Scott Frazee, whose primary
machine was located in the PUMP A Cell. Prior to the implementation of the Demand Flow
system, Frazee operated two machines. After implementation, a third machine was added.
Dumas opined that the job now required “a significant amount more of skill” as Frazee has to
machine the part as well as manufacture and test the pump. Essentially, “[h]e has more
responsibility because of the addition of the machine.” (Tr. 112.) He also has flex duties in
another cell as well.

The implementation of Demand Flow Technology did not result in any changes in the
Company’s post strike personnel. All of the nonstriking employees continue to work under the
new system. There has been no hiring of outside people and no recall of any former strikers.

The current work force is involved in an ongoing training process. The goal is to train
each machinist so that he or she is able to operate every machine in the facility. Dumas

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described this objective as being of vital importance, noting that “if we don’t do it we can’t
compete in this global market.” (Tr. 108.) However, the goal is far from actual realization.
Dumas confirmed that no employee has reached this level of expertise and that it will be “a
couple of years” before this can occur. (Tr. 85.) As a result, currently, employees only operate
those machines that they know how to run.

Van Kirk described both the theory and actuality. He endorsed the theoretical goal,
observing that “[m]y job is to go to work and do whatever assignment is placed on me that day.”
(Tr. 215.) In practice, he testified that, of the 14 existing jobs, he is trained to perform 3. Thus,
in reality, his work assignments are selected from among those three.

In furtherance of the ultimate goal of total employee flexibility, the Company has devised
a formal training program. This involves on-the-job training and does not include any outside
education such as trade school or college. Employees can volunteer for posted training
opportunities selected from among the 14 work processes.16 Upon completion of the training,
they obtain certification in that work process. This concept of certification is not an outside
credential, but simply an internal record of employee proficiency. Dumas testified that since the
creation of this new training process as part of Demand Flow Technology, every employee has
met the expectations involved in obtaining training certifications.

In describing the personnel aspects of Demand Flow, Dumas testified that the eventual
goal is to move each employee every two hours. He opined that this would improve job
enjoyment by adding variability and would also reduce the risk of repetitive motion injuries. By
contrast, the system of employee compensation is essentially unchanged from before the
reconfiguration. All production employees are paid the same, regardless of their assignments
and regardless of the amount of training they have acquired.17

E. Legal Analysis

Evaluation of the parties’ contentions must begin with recognition that the Act grants
protection to workers engaged in strike activity. Section 2(3) provides that an individual “whose
work has ceased as a consequence of, or in connection with, any current labor dispute” remains
an “employee” unless he or she obtains “any other substantially equivalent employment.”

In NLRB v. Fleetwood Trailer Co., 389 U.S. 375 (1967), the Supreme Court held that the
Act’s protection of striking workers included entitlement to reinstatement upon the termination of
strike activity. The Court noted that it could be anticipated that, due to economic circumstances,
an employer may be unable to offer immediate reinstatement to all returning strikers. In such
cases, it defined the employer’s duty as requiring an offer of reinstatement “[i]f and when a job
for which the striker is qualified becomes available.” 389 U.S. at 381. The Court acknowledged
that the lower court had found that there was no evidence of antiunion motivation in the refusal
to reinstate the strikers. It held that evidence of such improper motivation was not required
since refusal of reinstatement was “destructive of important employee rights” under the Act. 389
U.S. at 380. The employer was required to bear the burden of proving that the refusal to
reinstate strikers was due to “legitimate and substantial business justifications.” 389 U.S. at
16 Examples of the paperwork associated with this training program are in the record. (R.
Exhs. 10 and 12.)
17 I do note that while all production employees have continued to receive the same pay
rate, Dumas testified that after the reconfiguration, “we found it prudent to increase their wages
[across the board] because of their production.” (Tr. 80.)

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378, citing NLRB v. Great Dane Trailers, 388 U.S. 26, 34 (1967). Finally, the Court noted that,
in its brief, the Board had suggested that such justifications could include “the need to adapt to
changes in business conditions or to improve efficiency.” 388 U.S. at 379.

In the following year, the Board gave further consideration to reinstatement rights in light
of Fleetwood. In Laidlaw Corp., 171 NLRB 1366 (1968), the employer hired permanent
replacements during a strike. After the strike, certain of these replacement workers left the
company’s employ. The company declined to reinstate qualified striking employees, choosing
instead to hire new workers. The Board described the “underlying principle” of the Supreme
Court’s decisions in Fleetwood and Great Dane Trailers to be a determination that refusal to
reinstate former strikers was so inherently destructive of workers’ rights under the Act that

hiring new employees in the face of outstanding applications
for reinstatement from striking employees is presumptively a
violation of the Act, irrespective of intent unless the employer
sustains his burden by showing legitimate and substantial
reasons for his failure to hire the strikers.

171 NLRB at 1369. The Board held that economic strikers who apply for reinstatement at a
time when their positions are filled by permanent replacements remain “employees” under the
Act and are entitled to reinstatement upon the departure of the replacements unless the
employer can sustain the burden of proving that the failure to offer reinstatement was due to
legitimate and substantial business reasons.

The Board further delineated the right of reinstatement in Rose Printing Co., 304 NLRB
1076 (1991). During a strike, the employer hired permanent replacements. Upon the departure
of several replacements, the employer hired new people to fill the vacancies. The General
Counsel sought an order requiring reinstatement of strikers. The Board declined the request,
finding that the available vacancies were for “entry level general worker positions . . . which
were not substantially equivalent to [the strikers’] prestrike jobs because of lower pay and skill
levels.” 304 NLRB 1076. The Board limited the right of reinstatement to the strikers’ former
jobs or to other jobs which were substantially equivalent to the former jobs. The right of
reinstatement did not include placement in any available job, even if the striker were qualified to
perform such other job.

In Zimmerman Plumbing & Heating Co., 334 NLRB No. 81 (2001), the Board took the
opportunity to summarize key aspects of the right to reinstatement:

It is settled that both economic strikers and unfair labor
practice strikers retain their status as “employees” under
Section 2(3) of the Act . . . As a result, an employer violates
Section 8(a)(3) and (1) of the Act by failing to immediately
reinstate strikers upon their unconditional offer to return to
work, unless the employer establishes a legitimate and
substantial business justification for failing to do so.

The Board has recognized that one legitimate and substantial
justification for not immediately reinstating former strikers is a
bona fide absence of available work for the strikers in their
prestrike or substantially equivalent positions . . . However, a
striker’s right to reinstatement does not expire simply because
no suitable work is available when he unconditionally offers to

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return to work. His right to reinstatement continues until his
position or a substantially equivalent position becomes
available.

334 NLRB No. 81, slip op. at 3. [Internal citations omitted.]

While these general principles affecting the rights of strikers form the essential legal
framework, the precise issue under consideration in this case is slightly different. The General
Counsel does not contend that the Company has improperly refused to reinstate any of its
striking employees. The uncontroverted evidence shows that since the unconditional offer to
return to work, there has never been work available for the strikers. The transfer of cylinder
production and the adoption of a new method of production have reduced the need for workers
to such an extent that the Company has met its production requirements entirely through use of
the existing workforce. It has not hired any new workers since the commencement of the strike.
The General Counsel has concurred in the Company’s contention that the transfer of cylinder
production was made for legitimate and substantial business justifications unrelated to the strike
activity. As a result, the Company has never incurred any legal obligation to reinstate striking
employees.

Because this much is undisputed, the Company strongly contends that the General
Counsel lacks any legal basis for its request that the Board direct the Company to maintain a
preferential recall list so that its striking employees may be recalled to any of their former jobs or
substantially equivalent jobs that may become available in the future. In the Company’s view,
there can be no statutory basis for such relief since the strikers’ loss of employment was not a
consequence of their decision to go on strike, but rather of the Company’s decision to reduce its
work force for unrelated legitimate and substantial reasons.

Upon careful reflection, I conclude that the Company’s analysis is correct as far as it
goes, but it fails to take into account the full import of the Act’s grant to strikers of protection
against discrimination. In my view, the General Counsel is not seeking (and could not seek) the
requested relief as remedy for the Company’s decision to reduce the number of employees
working at the Omahaline facility. As the decision to reduce the work force has been found to
be supported by legitimate and substantial justifications, it is privileged. While the decision to
decrease the number of employees cannot give rise to any entitlement to the relief sought, the
same is not true for the Company’s actions taken to implement the reduction in work force. I
conclude that the gravamen of the General Counsel’s complaint is that the Company violated
Section 8(a)(1) and (3) of the Act when it decided to reduce its work force through the method of
retaining all of its nonstriking employees while terminating all of its striking employees and
refusing to grant preferential recall rights to those striking employees. I further conclude that
under either of the two possible legal theories, the General Counsel has met its burden of proof
in this regard.18
18 Counsel for the Respondent asserts that the General Counsel is “estopped” from pursuing
a theory of inherent destructiveness to Sec. 7 rights because he “did not plead this theory in the
Complaint.” (R. Br. at 7—8.) No authority for this proposition is cited. The Board’s Rules and
Regulations do not require the General Counsel to plead legal theories in the complaint. See:
Sec. 102.15. The Board’s processes in regard to pleadings are flexible, not formulaic. See:
Boilermakers Local 363 (Fluor Corp.), 123 NLRB 1877, 1913 (1959). I perceive no irregularity
in the form of the General Counsel’s complaint, nor do I conclude that the General Counsel is
prevented from arguing any appropriate legal theory in support of its allegations made in the
complaint.

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I have first examined the evidence using the legal framework established by the
Supreme Court in Fleetwood and implemented by the Board in Laidlaw. Under this analysis, I
must determine if the Company engaged in prohibited discriminatory conduct in the manner in
which it implemented the reduction in force, including the refusal to accord reinstatement rights
to the former strikers. If so, I must determine whether the Company’s conduct was destructive
of important employee rights under the Act. Finally, I must determine whether the Company’s
conduct was based on legitimate and substantial business reasons.

Turning to the evidence, three things about the manner in which the Company elected to
implement its reduction in force are readily apparent. First, it abandoned the sophisticated,
multifaceted assessment process that it had previously employed in implementing a work force
reduction. Second, it adopted a method that consisted of only one criterion, participation or
nonparticipation in the strike. Third, despite the Union’s request, it declined to create a
preferential reinstatement process for strikers whose positions were affected by the reduction in
force.

It will be recalled that, in February 2001, the Company decided to reduce its work force
after suffering the loss of orders from a major customer. This was the Company’s first
experience with this type of problem. In response, management developed a detailed
assessment tool used to perform a comparative evaluation of the employees in order to
establish their relative value to the Company. It is noteworthy that, although all of the lost
orders were for cylinders, the ranking system rated all employees, including those whose
primary responsibilities were in the manufacture of pumps and motors. In addition, the ranking
listed all employees, whether they were classified as machinists or in any of the other categories
maintained by the Company. (See GC Exh. 8.) I find this intermingling of all employees
regardless of job title or area of primary responsibility to be highly probative. It demonstrates
that the Company’s real view of its work force was of an interchangeable and flexible group of
employees whose individual value was a function of such factors as knowledge of how to run a
variety of machines, possession of special skills, quality of work product, attendance history,
efficiency, and lack of disciplinary problems. These are the rating factors employed in the
implementation of the reduction in force in February 2001. Using these rating factors, the
Company selected employees from cylinder, pump, and motor production for termination. By
the same token, it retained employees whose primary functions were in each of these three
areas of production.

It is evident that management expended a great deal of thought, time, and effort to
devise the ranking system used to implement the February reduction in force. It is equally
evident that the purpose of this expenditure of time and effort was to retain those employees
who possessed the best qualifications.

In July 2002, the Company underwent its second reduction in force, due to the transfer
of cylinder operations. Instead of resorting to the assessment tool developed less than 2 years
earlier, the Company simply terminated all of the striking employees and retained all of the
nonstriking employees. It will be recalled that General Manager Dumas conceded, in counsel
for the General Counsel’s phraseology, that the “only thing that determined whether you were
laid-off or not laid-off . . . [was] whether you were on strike or not.” (Tr. 193.) None of the
ranking factors employed in the earlier reduction in force was utilized. Only one factor remained
constant. The Company continued to make its retention and discharge decisions without regard
to whether an employee worked primarily in cylinder, pump or motor production and without
regard to whether the employee was classified as a machinist or in some other job category.
Two examples of this will suffice. Gerald Wacker was classified as a QC employee whose

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primary duties were in the quality inspection of cylinder parts. Despite the abolition of cylinder
production and his lack of classification as a machinist, Wacker, a nonstriker, was not selected
for inclusion in the reduction in force and he remains employed as a member of the Company’s
current production staff. By contrast, Jeff Meyer, a striker, was a machinist engaged in pump
machining as his primary responsibility. Despite this, he was selected for inclusion in the
reduction in force. This is particularly significant since Meyer achieved the highest overall
ranking of any employee in the detailed assessment conducted in order to implement the
February 2001 force reduction. Indeed, he attained a score of 273, as compared to Wacker’s
score of 104. The evidence overwhelmingly establishes that the Company abandoned its past
practice and implemented its reduction in force by resort to only one criterion, participation or
nonparticipation in the strike.

I readily perceive that the Company’s decision to retain the nonstrikers and terminate the
strikers was not bizarre or irrational. Obviously, the nonstriking employees were making their
services immediately available to the Company, while the striking employees were withholding
theirs. Nevertheless, the Company’s total position leads me to infer that a motive to
discriminate against the strikers formed a substantial part of its decision-making process. In
drawing this conclusion, I note that the Board has reiterated that

[it] is well established that a discriminatory motive may be
inferred from circumstantial evidence and the record as a
whole, and that direct evidence of union animus is not
required.

Tubular Corp., 337 NLRB No. 13 (2001), slip op. at 1. [Citations omitted.] Furthermore, the
Board has noted that blatantly disparate treatment of union activists “supports an inference of
unlawful motivation.” Watkins Engineers & Constructors, Inc., 333 NLRB No. 99 (2001), slip op.
at 2. I find that the blatant disparity in treatment here—the retention of all nonstrikers and the
discharge of all strikers without instituting any recall procedures—supports a strong inference of
motivation to discriminate on the basis of union activity.

In my view, the strongest evidence of a discriminatory motive is revealed upon
consideration of the Company’s explanation for its refusal to grant preferential recall rights to
enable its striking employees to resume working once vacancies become available. The
Company takes the position that it no longer retains any positions that are the same as, or
substantially equivalent to, the positions held by the striking employees prior to the reduction in
force. The evidence belies this assertion.

The Company’s contention that it no longer has qualifying jobs for the striking employees
is based on its transfer of cylinder production and its adoption of Demand Flow Technology. I
will address each of these points.

There is no doubt that the loss of cylinder production has resulted in a significant and
apparently permanent reduction in the work force. Staffing has been reduced from a total of 70
employees in 1999 to the current total of 26. With this reduction, it may certainly be expected
that many strikers will never be recalled. Nevertheless, given the nature of changing workplace
conditions, some vacancies will almost inevitably occur. The Board has described the wide
array of factors that can lead to such vacancies:

Under Laidlaw, an economic striker’s entitlement to
reinstatement is contingent upon the existence of a
job vacancy. “A genuine job vacancy, commonly

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known as a ‘Laidlaw vacancy,’ may arise when, for
example, the company expands its workforce or
discharges a particular employee, or when an employee
quits or otherwise leaves the company.”

Pirelli Cable Corp., 331 NLRB 1538, 1540 (2000). (Citations omitted.)

The fact that the Company no longer manufactures cylinders is not an impediment to
reinstatement, even for those employees whose former primary responsibilities were in cylinder
production. The Company has never made a distinction between cylinder production and pump
and motor production when deciding whether to retain staff. During its first reduction in force, it
retained employees whose primary responsibilities were in cylinder production if they scored
well on the overall assessment. It eliminated lower scoring staff whose primary responsibilities
were in pump and motor production. Subsequently, when the Company abolished cylinder
production, it retained nonstriking cylinder employees. I find that the hallmark of the Company’s
actual attitude toward utilization of its work force was and remains maximum flexibility. As
Dumas summarized it, “we use them where we need them.” (Tr. 187.) Just as the Company
retained nonstriking employees whose primary functions had been in cylinder production, there
is no reason to find that it would be inappropriate to recall striking employees whose primary
functions had been in such production. Of course, a duty to recall striking employees can only
arise if vacancies become available in the strikers’ former jobs or substantially equivalent jobs.

The Company contends that the strikers’ former jobs and any substantially equivalent
jobs will never become available due to the changeover to Demand Flow Technology. I find this
to be a mere pretext. To be precise, I do not find that the Company’s decision to adopt Demand
Flow Technology was pretextual. The evidence demonstrates that adoption of this methodology
was designed to meet important business goals including increased efficiency, higher quality,
and increased employee productivity and job satisfaction. While the decision to adopt this
system of organizing production was genuine and not pretextual, the attempt to use the
adoption of Demand Flow Technology as a rationale for refusing to consider recall rights for
striking employees is not rational or consistent with the evidence regarding the impact of this
new system of production. I conclude that this argument is advanced as a pretext to justify
discriminatory refusal to consider reinstatement of the strikers.

The Company’s argument is that employees operating under the Demand Flow system
have so benefited from the training provided since the commencement of the strike and have
become so flexible that their current jobs are completely different from the jobs held by both
strikers and nonstrikers before the conversion. Ideally, after conversion, each employee is able
to operate all the machines involved in the production process and to self-direct his or her
efforts so as to perform a primary function and automatically shift to performing other related
functions in the production process. This is contrasted with the nature of the prestrike jobs.
Those jobs were specific to one part of the production process. Employees were responsible
for a specified portion of production and did not have self-directed duties elsewhere.

There are two difficulties with the Company’s view of the evidence. First, the reality of
Demand Flow Technology at Omahaline greatly differs from the ideal. Despite the post strike
training process, not a single employee is able to perform all of the job functions involved in the
production process. Indeed, Dumas testified that achievement of this objective is at least years
away. Thus, for example, Van Kirk testified that he is trained to perform 3 out of the 14
processes and his assignments are limited to those. Furthermore, the prestrike industrial
process was far more flexible than the Company suggests. The evidence shows that
management frequently transferred employees to temporary assignments outside their primary

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responsibilities. Such transfers lasted from a period of hours to a period of weeks. Reasons for
such transfers included coverage for absent employees, large demand for particular parts, and
down time due to broken equipment. The fact is that the Company’s prestrike workforce was
much more flexible that the Company suggests and its post strike work force is much less
flexible than it suggests.

The second difficulty with the Company’s position regarding the impact of Demand Flow
Technology is that it ignores the essential similarities between the Company’s pre and post
strike operations. Dumas testified that 95 per cent of the Company’s product line is identical to
the product line being manufactured before the strike. While all but two of the machines used to
produce cylinders have been removed, no new machines have been added.19 All of the
machines formerly used to manufacture pumps and motors are still being used to manufacture
pumps and motors. While two machines formerly used to manufacture cylinders have been
converted to pump and motor production, no new machines have been introduced into the
manufacturing process. As counsel for the General Counsel puts it:

Nobody had to get any outside training or additional
educational degrees to perform under DFT. Before the
strike, employees learned new machines by working with
an experienced employee. Since the implementation of
DFT, employees will continue to learn new tasks by working
with an experienced employee. All the jobs paid the same
as each other before the strike, and still pay the same now.
The employer is using the same machines to produce
basically the same products.

(GC Br. at 6.) (Citations to the transcript are omitted.)

The Company called employee Van Kirk as a witness regarding the impact of Demand
Flow Technology. His testimony is illuminating. He opined that the conversion dramatically
altered his job. Despite this, close examination of his testimony suggests otherwise. His
assignments are only selected from among the three job processes that he has learned. He
continues to make the same pump components he made before the conversion. More
importantly, Van Kirk touched upon what I find to be the essential irrationality in the Company’s
position. He agreed that having knowledge of how to operate particular machines would give a
prospective employee “an edge.” (Tr. 220.) He was also asked if a prospective employee’s
knowledge of the Company’s product line would be useful. He responded that:

It would have a great bearing if you didn’t know what the
product was. You couldn’t produce it. I mean, if you didn’t—
if you weren’t familiar with it, you—there’s no way you could
produce it . . . you would have to be trained.

(Tr. 221.) Indeed, Van Kirk indicated that this training would have to be “extensive.” (Tr. 221—
222.) This is a fundamental point that is probative as to two related issues of fact. First, it
reflects the fact that the Company’s current jobs are the same as, or certainly substantially
equivalent to, the strikers’ former jobs. Second, it demonstrates that the Company’s position is
either irrational or discriminatorily motivated. The refusal to accord recall rights to the former
19 The two remaining cylinder-related machines have been reconfigured to meet the needs
of pump and motor production.

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strikers in preference to persons with no prior work experience for the Company is, absent an
improper motive, simply inexplicable. It overlooks the substantial assets of those workers
including their familiarity with the Company’s current equipment and products. In fact, it rejects
members of the same pool of experienced employees from which it selected the original
complement of workers assigned to implement Demand Flow Technology. The only basis for
having rejected these particular members of this pool of experienced employees was their
participation in the strike.20 The suspicious nature of the Company’s position has been
recognized since the Board’s infancy. As long ago as 1938, in an opinion affirming an early
decision of the Board, Judge Learned Hand observed that a presumption of impropriety may be
drawn from an employer’s refusal to act on the principle that “seasoned men are better than
green hands.” NLRB v. Remington Rand, 94 F.2d 862, 872 (2d Cir. 1938), cert. denied 304
U.S. 590.

For these reasons, I conclude that the Company engaged in discriminatory conduct by
selecting all the striking employees (and only the striking employees) for termination while
refusing to accord them reinstatement rights. I have no difficulty in further concluding that this
conduct was destructive of important employee rights in the same manner as the conduct in
Fleetwood and Laidlaw. The implicit message directed to the Company’s employees embedded
in the heart of the Company’s conduct is that the discharged employees’ union activities were
the cause of their selection for termination and for the Company’s refusal to give them
preferential consideration for any future vacancies in their former jobs or substantially equivalent
jobs. The Company’s decisions convey a bold, clear, and toxic message regarding the
consequences of union activities.

Consideration of relevant precedents is of considerable value in assessing the
Company’s assertion that its decision to refuse preferential recall rights is supported by the
legitimate and substantial reason that it will not have future vacancies in the strikers’ former jobs
or any substantially equivalent jobs.

Turning first to cases where the Board found that no qualifying jobs existed for strikers,
the Company cites Weyerhauser Co., 274 NLRB 972 (1985). In that case, at the conclusion of
a strike, the employer terminated all of its operations at the plant in question “due to economic
conditions neither caused by, nor related to, the strike.” 274 NLRB at 973. All of the plant’s
employees, strikers and nonstrikers, were laid off. As a result, the Board adopted the
administrative law judge’s conclusion that there was no discrimination and, hence, no reason to
reach the reinstatement issue. This is entirely different from the situation presented here. In
Weyerhauser, all of the employees lost their jobs. In this case, all of the nonstriking employees
retained employment, while all of the striking employees lost theirs. Thus, the situation
presented here is the polar opposite of that addressed in Weyerhauser. Obviously, in
Weyerhauser, there could be no substantially equivalent jobs since there were no jobs at all.

The Company next cites NLRB v. Southern Florida Hotel & Motel Assn., 751 F.2d 1571
(11th Cir. 1985). In that case, a hotel was confronted by a strike involving some of its breakfast
waitresses. It modified its breakfast service by adopting a buffet format. Nonstriking waitresses
were given employment as buffet line servers. The hotel found that customers preferred the
buffet breakfast and the hotel saved on labor costs. As a result, after the strike, the hotel
20 Counsel for the General Counsel cites specific instances to demonstrate that retained
employees had scored lower on the 2001 assessment than striking employees. Despite this,
the Company views them as competent to perform under Demand Flow Technology while
contending that the higher scoring strikers are not qualified to do so. (GC Br. at 9.)

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retained the buffet format and refused to reinstate the striking waitresses. The Court held that
the conversion to buffet format was made for legitimate and substantial business reasons and
that the waitresses’ jobs had been abolished. After the conversion, there were simply no more
breakfast waitresses. This stands in contrast to the situation in this case. After the conversion,
the Company had fewer production jobs. Nevertheless, it continued to have production jobs,
jobs in which the employees used the same machines to produce the same products as before
the conversion.

In 1992, the Board addressed this issue in California Distribution Centers, 308 NLRB 64
(1992). Prior to a strike, the company employed warehousemen and driver-warehousemen that
performed some of the same duties. Driver-warehousemen also performed additional driving
duties. Due to a change in business conditions, after the strike the company elected to employ
fewer warehousemen and more driver-warehousemen. The Board approved the company’s
decision to decline reinstatement rights to the warehousemen, finding that the two jobs were not
substantially equivalent. A key factor underlying this decision was the requirement that driver-
warehousemen possess Class I drivers’ licenses. The warehousemen lacked such licenses.
Once again, this is significantly different from the situation encountered here. There is simply
no basis upon which to disqualify the strikers from future employment. This is most clearly
illustrated by noting that the nonstrikers possessed the same (and in some cases fewer)
qualifications for the Demand Flow Technology jobs as did the strikers. All of the nonstriking
employees were given employment. As Van Kirk’s testimony illustrated, there can be no doubt
that the strikers would possess qualifications arising from their knowledge of the Company’s
machines and products that would render them similarly qualified for reinstatement.

Finally, the Board considered two aspects of this issue in Laidlaw Waste Systems, 313
NLRB 680 (1994). The case involved a company that operated two facilities located in close
proximity and employed drivers of four different types of vehicles. After a strike, the company
refused reinstatement of several drivers. The Board upheld a portion of the company’s position,
finding that the different types of driving jobs were not substantially equivalent since they made
different physical demands upon the drivers, required different levels of skill, and required
different types of drivers’ licenses. On the other hand, the Board rejected the company’s claim
that it was not required to offer drivers formerly stationed at one facility work at the company’s
other nearby facility. It based this conclusion on the fact that workers at both facilities belonged
to the same bargaining unit, received the same or similar wages, maintained the same seniority
system, and were permitted to transfer between the two facilities. The considerations discussed
in Laidlaw Waste Systems do not support the Company’s position since its production jobs all
continue to be compensated at the same rate and continue to involve equivalent skills and
qualifications.

Other precedents clearly support the General Counsel’s position in this case. In another
hotel case, Arlington Hotel Co., 273 NLRB 210 (1984), enf. 785 F.2d 249 (8th Cir. 1986), cert.
denied 479 U.S. 914 (1986), the hotel hired new workers while refusing to reinstate former
strikers. The Board noted the hotel’s prior policy of freely transferring its employees among
disparate job categories within the institution. It also noted the hotel’s emphasis on training
designed to maximize the capabilities of the staff. In uphold the Board’s finding of unlawful
conduct, the Court of Appeals observed that:

[u]nder the facts of this case, we find that the Board did not
err in holding that the Hotel discriminated against the strikers
by not offering them jobs for which they were qualified. The
Hotel had a policy of cross-training and developing multiple
capabilities for its employees . . .

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The Hotel’s recall policy, therefore, clearly discriminated against
unreinstated strikers in favor of new job applicants . . .

785 F.2d at 251. The hotel’s policy closely matches that of Omahaline, both before and after
the strike. Dumas testified that it had been the Company’s policy that its employees would be
“cross trained in a number of functions.”21 (Tr. 164.) In an affidavit, he characterized the
employees as “very interchangeable.” (Tr. 185.) If anything, the emphasis on cross training is
even greater under Demand Flow Technology. Just as with the hotel, this longstanding
corporate objective completely undercuts the asserted basis for the Company’s refusal to grant
reinstatement rights.

In Wright Tool Co., 282 NLRB 1398 (1987), enf. 854 F.2d 812 (6th Cir. 1988), the Board
faced a situation quite similar to the facts in this case. Machine operators were refused
reinstatement after a strike. In rejecting that company’s defense bearing many similarities to the
position of this Respondent, the Board affirmed the administrative law judge’s characterization
of the decisive circumstances:

The testimony of [a witness called by the company] conceded
that employees are moved from one machine to another when
work for the specific machine to which an employee is assigned
is low or the machine is inoperable. Respondent has not
demonstrated it now has different machines and tools more
difficult to operate. Nor has it shown that the qualifications of
the newly hired employees are better than the long-experienced
employees on the recall list and, if so, how.

282 NLRB at 1403—1404. Likewise, Omahaline has failed to show that despite inauguration of
Demand Flow Technology, its work processes are significantly different or its striking employees
less qualified than the nonstriking employees it converted to the new process.

In Little Rapids Corp., 301 NLRB 604 (1993), a respondent mounted a defense to
reinstatement quite similar to the assertion that Demand Flow Technology completely altered
the jobs such that no substantially equivalent positions remained. The Board noted that the
company had “introduced some new equipment and methods of quality control which involved
employee training,” but rejected this defense to the refusal to reinstate former strikers. 301
NLRB 604, at fn. 2.

In 1998, the Board further delineated the extent of strikers’ reinstatement rights under
Rose Printing, supra. In Towne Ford, Inc., 327 NLRB 193 (1998), affd. in pertinent part 238
F.2d 429 (9th Cir. 2000), the company reorganized its work force after a strike. It declined to
reinstate three apprentice painters to newly created jobs as polishers, despite the fact that the
apprentices had performed polishing work prior to the strike. The Board held that:

It is undisputed that polishing work was a not insignificant
part of the job that apprentice painters had performed before
the strike, and had the three been working as apprentice
painters at the time the reorganization of the operation into
21 For example, Dumas testified that the cylinder employees were capable of doing the
pump and motor work as well. (Tr. 190.)

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three separate functions occurred, they would logically have
been moved to the polisher position. Thus, in finding
substantial equivalence, we are not running afoul of the
Rose Printing rule that there is no Laidlaw obligation to
reinstate strikers to any position for which they are
qualified, without regard to what they did before the strike.
Rather, we are carrying out what was acknowledged in
Rose Printing as the Board’s duty: “to ensure that strikers
who have unconditionally offered to return to work are . . .
treated the same as they would have been had they not
withheld their service.”

327 NLRB at 194—195. (Internal citation omitted.) This reasoning applies with equal force
here. As the counsel for the General Counsel observes:

Had there been no strike and a nondiscriminatory reduction
in force, the chances of the [reduction in force] list matching
the list of strikers is nonexistent. Out of the top fifteen
machinists on the Employer’s February 2001 rating system
who haven’t quit, nine are strikers.

(GC Br. at 11-12.)

All of the Company’s nonstriking employees were retained after reorganization. An order
directing the creation of a preferential recall list simply takes a necessary step to ensure that the
strikers are treated in a similar manner than they would have been had they not withheld their
service.

Upon consideration of the evidence of record and the relevant precedents, I conclude
that the Company has failed to meet its burden of establishing a substantial and legitimate
business justification for its decision to select persons subject to reduction in force by the sole
criterion of participation in the strike and its refusal to offer those individuals preferential recall
status. On this basis, I conclude that the Company has violated Section 8(a)(1) and (3) of the
Act.

Since I have found that the Company’s actions destroyed important rights granted to the
strikers under the Act and that the Company failed to meet its burden of showing a legitimate
and substantial business justification for its conduct, there is no requirement that antiunion
motivation be demonstrated under the test described in Fleetwood and Laidlaw. Nevertheless, I
recognize that the issue in this case is slightly different from the pure reinstatement situation,
albeit closely related. In Fleetwood and Laidlaw, the General Counsel sought immediate
reinstatement.22 The remedial issue here is the creation of a preferential recall list. In light of
this difference, I have also considered the evidence by employing the analytical framework set
22 I do not wish to overemphasize the difference between the issue in Fleetwood and
Laidlaw and that presented here. For example, in Globe Molded Plastics Co., 204 NLRB 1041
(1973), the Board observed that “specific proof of antiunion animus [was] not required” when
evaluating the respondent’s refusal to credit reinstated strikers with past service. 204 NLRB
1041 at fn. 1. From this, I conclude that issues that are promixately related to reinstatement of
former strikers would involve the same framework for analysis as those that concern
reinstatement itself.

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forth in Wright Line.23 This requires that the General Counsel show that the discharged
employees were engaged in protected, concerted activity, that the Company was aware of such
activity, and that the activity was a substantial or motivating factor for the decisions to discharge
and refuse preferential recall rights to those employees. If the General Counsel makes this
showing, the burden shifts to the Company to demonstrate that it would have taken these same
actions even in the absence of the protected, concerted activity.

It is evident that the striking employees were participating in a form of protected,
concerted activity and that the Company was aware of their participation. In his testimony,
Dumas conceded that the sole distinction between discharged employees and retained
employees was participation or lack of participation in the strike. I also find that the strikers’
union activities formed a substantial or motivating factor in the decisions to select them for
reduction in force and deprive them of preferential recall rights. I base this conclusion on the
blatant disparity in their treatment as compared to the non-striking employees. I place great
weight upon the fact that the Board endorsed precisely this analysis in a hypothetical discussion
in Laidlaw itself. It will be recalled that the Board declined to require a finding of antiunion
animus when the issue involved failure to reinstate strikers. However, in a footnote, it made the
following highly pertinent observation:

Even if a finding of antiunion motivation is necessary, the
employer’s preference for strangers over tested and
competent employees is sufficient basis for inferring such
motive, and we, in agreement with the Trial Examiner, would
do so if we considered motive material.

Laidlaw Corp., 171 NLRB 1366 (1968) at fn. 14. I draw the same conclusion here.

A finding of antiunion animus is bolstered by consideration of the Company’s
explanations for its refusal to grant preferential recall status. I have previously discussed my
reasons for concluding that these explanations are pretextual. The Board has recently
observed that it is a “well settled” doctrine that “where an employer’s stated motive is found to
be false, an inference may be drawn that the true motive is an unlawful one that the employer
seeks to conceal.” Key Food, 336 NLRB No. 6, slip op. at 4 (2001), citing Shattuck Denn Mining
Corp. v. NLRB, 362 F.2d 466, 470 (9th Cir. 1966). Having found that the Company’s asserted
justifications for its actions are not logical and consistent, I conclude that they are a pretext
advanced to conceal antiunion animus. Thus, the General Counsel has met its initial burden
under Wright Line. Lastly, having found the Company’s justifications to be pretextual, it follows
that the Company has failed to carry its burden of establishing that it would have selected the
striking employees for reduction in force and refused to accord them preferential recall rights
regardless of their union activities.

Under either of the two analytical models, I find that by selecting all of its striking
employees for reduction in force while retaining all of its nonstriking employees and by refusing
preferential recall rights to its striking employees, the Company has violated Section 8(a)(1) and
(3) of the Act. In coming to this ultimate conclusion, I have placed great weight upon the
General Counsel’s combination of legal theory and proposed remedy. In my view, this overall
formulation of the problem presented in this case strikes a proper accommodation of the parties’
competing interests within the framework of the Act. Limiting the relief sought to the creation of
23 251 NLRB 1083, 1089 (1980), enfd. 662 F.2d 899 (1st Cir. 1981), cert. denied 455 U.S.
989 (1982), approved in NLRB v. Transportation Management Corp., 462 U.S. 989 (1982).

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a preferential recall system protects the employer’s economic freedom to adapt to changing
circumstances by transferring aspects of production and by redesigning the remaining
production processes. In the circumstances presented in this case, it also grants the employer
the latitude to retain those employees who are offering their services while reducing its
workforce by laying off those employees who are withholding their services. As a result, the
General Counsel’s position affords appropriate protection to the legitimate economic interests of
the employer.

While protecting the employer’s lawful interests, the General Counsel’s position also
honors the Act’s grant of protection to the striking employees in a carefully calibrated manner.
By choosing to withhold their services, those employees assumed certain economic risks. The
end result proposed by the General Counsel does not relieve them of the consequences of
taking such risks. It is strictly confined to the protection of their rights granted under the Act.
Grant of the limited relief being sought conveys to the parties the important message that
participation in union activities will not subject employees to retaliation and reprisals that are
motivated by animus, as opposed to adverse employer actions motivated by genuine economic
considerations.

In my view, the result I am recommending achieves the same purposes as the result
approved by the Board in Lehigh Metal Fabricators, 267 NLRB 568 (1983), enf. 735 F.2d 1350
(3rd Cir. 1984). In that case, striking welders were refused reinstatement on the basis that the
employer had evolved from an “unskilled fabricator to [a] quality assurance shop.” 267 NLRB at
574. Because of this change, the company contended that it needed the freedom to refuse
reinstatement of striking welders in order to be able to hire more highly skilled welders. The
administrative law judge rejected this assertion, noting that

recruitment of the finest welders available no doubt would
contribute to this otherwise legitimate business objective.

It is plain, however, that impaired reinstatement opportunities
are not condoned simply because it is necessary to produce
a business gain. Accommodation is necessary “between the
asserted business justifications and the invasion of employee
rights [considered] in light of the Act and its policy.” [Citing Great
Dane Trailers, supra.] . . .

Growth in work force skill levels and an ongoing interest in
improving the performance thereof through new hires is not
peculiar to Respondent’s needs but represents a pervasive,
commonly held goal of any effective manager. Though salutary,
it is not viewed in this quarter as the type of business judgment
so special as to reduce an employer’s obligation to reinstate the
striker, if qualified, as contemplated by Laidlaw, to a mere duty
to reinstate the striker if he is the best qualified that might be
recruited from any source. To hold otherwise would countenance
a significant impediment to employee exercise of the rights
guaranteed in Sections 7 and 13 of the Act. Employees would tend
to be most hesitant, perhaps to the point of refraining entirely from
making common cause in legitimate strike action, were the risk of
permanent replacement compounded by legal recognition of a
further right in employers to select from any source, on an
unverifiable, subjective basis, the individual whom management

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deems the most qualified.

267 NLRB at 574—575. With these considerations in mind, I recommend adoption of the relief
requested by the General Counsel.

Conclusion of Law

By selecting all of its striking employees for reduction in force while retaining all of its
nonstriking employees, and by declining to accord its striking employees preferential recall
status upon the termination of the strike, the Respondent violated Section 8(a)(1) and (3) of the
Act.

Remedy

Having found that the Respondent has engaged in certain unfair labor practices, I
recommend that it be ordered to cease and desist and to take certain affirmative action
designed to effectuate the policies of the Act.

With regard to affirmative relief, the Respondent should be ordered to devise and
implement a system of preferential recall for those of its former striking employees named in the
complaint.24 It should also be ordered to offer any of such former striking employees
reinstatement to any of their former jobs or other substantially equivalent jobs that become
available.25 For the reasons detailed in the body of this decision, such jobs shall include any
vacancies among the Respondent’s current production positions. The Respondent should also
be ordered to make the former striking employees whole for any financial losses they may have
suffered as a result of the unlawful conduct. As suggested by the General Counsel,
determination of whether such losses have been incurred is best left to the compliance process.
In the event that such financial losses are found to have been incurred, Respondent should
make such losses whole, with interest as computed in New Horizons for the Retarded, 283
NLRB 1173 (1987).

On these findings of fact and conclusions of law and on the entire record, I issue
the following recommended26
24 I note that the Company has already informed the Union that it intends to negotiate “layoff
and recall” rights. (GC Exh. 7.)
25 I do not recommend any time limit on such reinstatement rights. The Board has rejected
such time limits as being contrary to the principles enunciated in Fleetwood and Laidlaw. See:
Brooks Research & Mfg., 202 NLRB 634, 636 (1973). Of course, any individual reinstatement
right will terminate under the terms of the Act if the person obtains “any other substantially
equivalent employment.”
26 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and
Regulations, the findings, conclusions, and recommended Order shall, as provided in Sec.
102.48 of the Rules, be adopted by the Board and all objections to them shall be deemed
waived for all purposes.

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ORDER

The Respondent, Omahaline Hydraulics Company, a division of Prince Manufacturing
Company, its officers, agents, successors, and assigns, shall

1. Cease and desist from

(a) Selecting for reduction in force or otherwise discriminating against any
employee for supporting District No. 7, International Association of
Machinists & Aerospace Workers, AFL-CIO, or any other union, or
participating in union activities.

(b) Refusing to accord preferential recall status to its former striking employees
for any vacancies that may occur in their former jobs or in substantially
equivalent jobs.

(c) In any like or related manner interfering with, restraining, 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.

(a) Within 14 days from the date of this Order, devise and implement a
preferential system for recall and reinstatement of the following persons to
any vacancies in their former jobs or substantially equivalent jobs: Wade
Capron, John W. Carpenter, Scott E. Frazee, Bruce E. Gilbertson, Chance
Hall, Gary J. Heyden, Roger Hummel, Lake Larson, David E. Linn, Toni
Loker, Chris Mace, Drake C. Malm, Scott A. Malm, Jeff L. Meyer, Paul L.
Mortweet, Ryan C. Nelson, Steven Parent, Mark L. Pauley, Jeremiah G.
Reese, Jim W. Reno, Allen C. Rohan, Ben J. Schrunk, Ron K. Sherril, Mark
A. Sorenson, Shannon M.Sorenson, Kenny Swigart, Jesse D. Whittington,
and Troy E. Wright.

(b) Upon the occurrence of any vacancy in a former job or substantially
equivalent job, and in accordance with the terms of the preferential recall
system, reinstate Wade Capron, John W. Carpenter, Scott E. Frazee,
Bruce E. Gilbertson, Chance Hall, Gary J. Heyden, Roger Hummel, Lake
Larson, David E. Linn, Toni Loker, Chris Mace, Drake C. Malm, Scott A.
Malm, Jeff L. Meyer, Paul L. Mortweet, Ryan C. Nelson, Steven Parent,
Mark L. Pauley, Jeremiah G. Reese, Jim W. Reno, Allen C. Rohan, Ben J.
Schrunk, Ron K. Sherril, Mark A. Sorenson, Shannon M.Sorenson, Kenny
Swigart, Jesse D. Whittington, and Troy E. Wright.

(c) Make Wade Capron, John W. Carpenter, Scott E. Frazee, Bruce E.
Gilbertson, Chance Hall, Gary J. Heyden, Roger Hummel, Lake Larson,
David E. Linn, Toni Loker, Chris Mace, Drake C. Malm, Scott A. Malm,
Jeff L. Meyer, Paul L. Mortweet, Ryan C. Nelson, Steven Parent, Mark L.

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Pauley, Jeremiah G. Reese, Jim W. Reno, Allen C. Rohan, Ben J. Schrunk,
Jeremiah G. Reese, Jim W. Reno, Allen C. Rohan, Ben J. Schrunk, Ron K.
Sherril, Mark A. Sorenson, Shannon M. Sorenson, Kenny Swigart, Jesse D.
Whittington, and Troy E. Wright whole for any financial loss suffered as a
result of the discrimination against them, in the manner set forth in the
remedy section of the decision.

(d) 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 designated by the Board or its agents, all payroll records, social
security payment records, timecards, personnel records and reports, and all
other records, including an electronic copy of such records if stored in
electronic form, necessary to analyze the amount of money that may be due
under the terms of this Order.

(e) Within 14 days after service by the Region, post at its facility in North Sioux
City, South Dakota, copies of the attached notice marked “Appendix.”27
Copies of the notice, on forms provided by the Regional Director for Region
18, after being signed by the Respondent’s authorized representative, shall
be posted by the Respondent immediately upon receipt and maintained for
60 consecutive days in conspicuous places including all places where
notices to employees are customarily posted. Reasonable steps shall be
taken by the Respondent to ensure that the notices are not altered, defaced,
or covered by any other material. In the event that, during the pendency of
these proceedings, the Respondent has gone out of business or closed the
facility involved in these proceedings, the Respondent shall duplicate and
mail, at its own expense, a copy of the notice to all current employees and
former employees employed by the Respondent at any time since July 31,
2002.

(f) Within 21 days after service by the Region, file with the Regional Director a
sworn certification of a responsible official on a form provided by the Region
attesting to the steps that the Respondent has taken to comply.

Dated, Washington, D.C. March 18, 2003

_____________________
Paul Buxbaum
Administrative Law Judge

27 If this Order is enforced by a Judgment of the United States Court of Appeals, the words
in the notice reading “POSTED BY ORDER OF THE NATIONAL LABOR RELATIONS BOARD”
shall read “POSTED PURSUANT TO A JUDGMENT OF THE UNITED STATES COURT OF
APPEALS ENFORCING AN ORDER OF THE NATIONAL LABOR RELATIONS BOARD.”
JD–16—03
Sioux City, IA
APPENDIX

NOTICE TO EMPLOYEES

Posted by Order of the
National Labor Relations Board
An Agency of the United States Government

The National Labor Relations Board has found that we violated Federal labor law and has
ordered us to post 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 benefit and protection
Choose not to engage in any of these protected activities

WE WILL NOT select you for inclusion in any reduction in force or otherwise discriminate
against you for supporting District No. 7, International Association of Machinists & Aerospace
Workers, AFL-CIO, or any other union, or for engaging in union activities.

WE WILL NOT refuse to offer reinstatement to former striking workers due to their support of
District No. 7, International Association of Machinists & Aerospace Workers, AFL-CIO, or any
other union, or for engaging in union activities.

WE WILL NOT in any like or related manner interfere with, restrain, or coerce you in the
exercise of the rights guaranteed you by the National Labor Relations Act.

WE WILL, within 14 days from the date of the Board’s Order, devise and implement a
preferential system for recall and reinstatement of the following persons to any future vacancies
in their former jobs or substantially equivalent jobs: Wade Capron, John W. Carpenter, Scott E.
Frazee, Bruce E. Gilbertson, Chance Hall, Gary J. Heyden, Roger Hummel, Lake Larson, David
E. Linn, Toni Loker, Chris Mace, Drake C. Malm, Scott A. Malm, Jeff L. Meyer, Paul L.
Mortweet, Ryan C. Nelson, Steven Parent, Mark L. Pauley, Jeremiah G. Reese, Jim W. Reno,
Allen C. Rohan, Ben J. Schrunk, Ron K. Sherril, Mark A. Sorenson, Shannon M.Sorenson,
Kenny Swigart, Jesse D. Whittington, and Troy E. Wright.

WE WILL make Wade Capron, John W. Carpenter, Scott E. Frazee, Bruce E. Gilbertson,
Chance Hall, Gary J. Heyden, Roger Hummel, Lake Larson, David E. Linn, Toni Loker, Chris
Mace, Drake C. Malm, Scott A. Malm, Jeff L. Meyer, Paul L. Mortweet, Ryan C. Nelson, Steven
Parent, Mark L. Pauley, Jeremiah G. Reese, Jim W. Reno, Allen C. Rohan, Ben J. Schrunk,
Ron K. Sherril, Mark A. Sorenson, Shannon M.Sorenson, Kenny Swigart, Jesse D. Whittington,
and Troy E. Wright whole for any financial loss or loss of other benefits resulting from the
manner in which they were selected for reduction in force, plus interest.

OMAHALINE HYDRAULICS COMPANY
(Employer)

Dated By
(Representative) (Title)
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Sioux City, IA
The National Labor Relations Board is an independent Federal agency created in 1935 to enforce the National Labor
Relations Act. It conducts secret-ballot elections to determine whether employees want union representation and it
investigates and remedies unfair labor practices by employers and unions. To find out more about your rights under
the Act and how to file a charge or election petition, you may speak confidentially to any agent with the Board’s
Regional Office set forth below. You may also obtain information from the Board’s website: www.nlrb.gov.
330 Second Avenue South, Towle Building, Suite 790, Minneapolis, MN 55401-2221
(612) 348-1757, Hours: 8 a.m. to 4:30 p.m.

THIS IS AN OFFICIAL NOTICE AND MUST NOT BE DEFACED BY ANYONE
THIS NOTICE MUST REMAIN POSTED FOR 60 CONSECUTIVE DAYS FROM THE DATE OF POSTING AND MUST
NOT BE ALTERED, DEFACED, OR COVERED BY ANY OTHER MATERIAL. ANY QUESTIONS CONCERNING THIS
NOTICE OR COMPLIANCE WITH ITS PROVISIONS MAY BE DIRECTED TO THE ABOVE REGIONAL OFFICE’S
COMPLIANCE OFFICER, (612) 348-1770.