## Facts

- International Paper Co. operated a unionized paper mill in Mobile, Alabama; the collective-bargaining agreement expired January 31, 1987.
- Negotiations for a new agreement stalled; on February 20, 1987, the company presented a “best and final” offer and warned it would lock out employees if rejected.
- After rejection, the company locked out about 915 production employees and 285 maintenance employees.
- To continue operations, the company subcontracted maintenance work during the lockout to BE&K Construction Co., which appeared to reduce costs.
- BE&K later proposed a permanent subcontract for maintenance work, projecting substantial annual savings.
- The company bargained with the unions about the proposed permanent subcontract and then implemented it while the lockout continued, permanently displacing the locked-out maintenance workforce.
- Months later, the company ended the lockout and canceled the permanent subcontract; the unions filed unfair labor practice charges.
- The NLRB found violations of NLRA §§ 8(a)(1), 8(a)(3), and 8(a)(5), inferring antiunion motive on the theory that permanent subcontracting during a lockout was “inherently destructive” of employees’ rights.

## Issues

1. Whether implementing a permanent subcontract of bargaining-unit maintenance work during a lawful lockout is “inherently destructive” of § 7 rights so that antiunion motive may be inferred without direct evidence.
2. Whether substantial evidence supported findings of discriminatory motive and resulting violations of §§ 8(a)(1) and 8(a)(3) given the employer’s asserted economic justification.
3. Whether the employer violated § 8(a)(5) by failing to bargain in good faith over the permanent subcontracting decision.

## Decision

- The D.C. Circuit granted the employer’s petition for review and denied enforcement of the Board’s order.
- The court held the permanent subcontracting during a lawful lockout was not “inherently destructive” under the Great Dane framework and did not, by itself, permit an inference of unlawful motive.
- The court found the record did not contain substantial evidence of antiunion motive sufficient to sustain §§ 8(a)(1) and 8(a)(3) violations in light of the employer’s economic rationale.
- The court rejected the § 8(a)(5) finding because the employer bargained with the unions over the permanent subcontracting decision before implementing it.

## Legal Principles

- Under the Great Dane framework, conduct deemed “inherently destructive” may permit an inference of unlawful motive without direct proof; conduct with less direct impairment of § 7 rights requires stronger proof of discriminatory intent when the employer offers legitimate business reasons.
- Severe adverse effects on employees, standing alone, do not automatically establish “inherently destructive” interference; the conduct must carry indicia of antiunion intent.
- An employer may lawfully maintain operations during a lawful lockout, and economically motivated subcontracting decisions are not unlawful absent substantial evidence of discrimination against employees for protected activity.
- Permanent subcontracting of bargaining-unit work is a mandatory subject of bargaining, but implementing such a decision after bargaining does not, without more, establish a § 8(a)(5) failure to bargain in good faith.

## Conclusion

The court set aside the NLRB’s unfair labor practice findings because permanent subcontracting of maintenance work during a lawful lockout was not categorically “inherently destructive,” the record did not substantially support an inference of antiunion motive given the employer’s cost-based justification, and the employer had bargained over the subcontracting decision.


International Paper Co. v. NLRB, 115 F.3d 1045 (D.C. Cir. 1997)