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District Lodge 26, International Association of Machinists & Aerospace Workers, AFL-CIO v. United Technologies Corp.

July 8, 2010

DISTRICT LODGE 26, INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS, AFL-CIO, PLAINTIFF-APPELLEE,
v.
UNITED TECHNOLOGIES CORPORATION, PRATT & WHITNEY, DEFENDANT-APPELLANT.



SYLLABUS BY THE COURT

Appeal from a judgment of the United States District Court for the District of Connecticut (Janet C. Hall, Judge). Following a bench trial, the district court issued a declaratory judgment to the effect that the defendant's announced plans to close two facilities in Connecticut and move the work performed at those facilities outside the State violated the collective bargaining agreement between the company and the plaintiff union. The district court issued a permanent injunction prohibiting the company from implementing the plans during the term of the collective bargaining agreement, which ends later this year.

Affirmed.

The opinion of the court was delivered by: Sack, Circuit Judge

Argued: June 9, 2010

Before: MINER, SACK, and HALL, Circuit Judges.

The defendant-appellant United Technologies Corporation, Pratt & Whitney Division ("Pratt"), appeals from a February 18, 2010, declaratory judgment issued by the United States District Court for the District of Connecticut (Janet C. Hall, Judge) following a five-day bench trial. The court held that Pratt's announced plans to close two of its airplane engine overhaul and repair facilities in Connecticut and move the work performed at those facilities out of the State violated its currently-in-force collective bargaining agreement (the "CBA") with the plaintiff-appellee, District Lodge 26 of the International Association of Machinists and Aerospace Workers, AFL-CIO ("District Lodge" or the "Union"). The court enjoined the implementation of those plans during the remaining term of the CBA. The court concluded that the plans fail to comply with one of the thirty-four "Letters of Agreement" incorporated by reference in the CBA, "Letter 22," which requires Pratt to "make every reasonable effort to preserve" work performed by members of the Union, and which defines "every reasonable effort" to include "pursuing actively and in good faith the goal of preserving the work" and assigning "extra value" in its decision-making to choices that would preserve the work. Letter 22, at Section 2.

The district court based its conclusion that in developing and seeking to implement the closure plans, Pratt was not pursuing, in good faith, the goal of preserving work within the bargaining unit on a wide variety of factual findings, many of which are not challenged on appeal and none of which, we conclude, were clearly erroneous. These findings include: that Pratt exhibited an unwillingness to consider alternative plans that would not generate annual recurring savings through 2013; that it refused to measure savings under any metric other than earnings before interest and tax ("EBIT"); that it abandoned negotiations with the State of Connecticut, which hoped to persuade Pratt not to remove work from the State; and that it*fn1 failed to accord "extra value" to options that would avoid closing the Connecticut facilities in question before developing and proposing plans to do so.

The district court concluded that Pratt had not made, and was not making, "every reasonable effort" to preserve bargaining unit work as required by the CBA. We find no error in the district court's application of the fact-intensive inquiry bargained for by the parties in Letter 22 or in the district court's determination that Pratt failed to pursue the goal of preserving bargaining unit work in good faith. We therefore affirm the judgment.

BACKGROUND

Pratt, a division of United Technologies Corporation ("UTC"), engages in the design, manufacture, and sale of commercial and military aircraft engines. It also performs maintenance, repair, and overhaul of such equipment. It maintains several facilities in Connecticut, two of which are the focus of the present controversy: the Cheshire Engine Center ("Cheshire"), a site for overhaul and repair work, and the Connecticut Airfoils Repair Operations ("CARO"), a site for turbine airfoil repairs. District Lodge is the exclusive bargaining agent for employees at the two Connecticut facilities. It also represents other Pratt employees at other installations.

On December 3, 2007, Pratt and District Lodge entered into the CBA, which is effective, by its terms, until December 5, 2010. Pursuant to the CBA, District Lodge agreed that it would "not call or sanction any strike . . . during the period of [the CBA]." CBA art. 24. The CBA also provides that Pratt "will retain the sole right . . . to determine the number and location of its plants . . . [and] the assignment of all work to employees or other persons." Id. art. 1.

Article 27 of the CBA details the procedures that Pratt is required to follow before closing a facility or transferring a business unit governed by the CBA. Among other things, if Pratt announces a plan to close a facility, it is required to make itself available to meet and confer with the Union about such a plan. See id. art. 27. Article 27 also provides, however, that "[t]he final decision regarding closing a plant or transferring a business unit rests solely with [Pratt]." Id. It is undisputed that Pratt has complied with the procedural requirements set forth in Article 27.

There are thirty-four "Letters of Agreement" incorporated into the CBA. One of these, Letter 22, is the focus of this action. It provides, inter alia: "[T]he Company [Pratt] will make every reasonable effort to preserve the work presently and normally manufactured by employees [covered by the CBA]." Letter 22 § 2(A). "[E]very reasonable effort" is further defined as:

pursuing actively and in good faith the goal of preserving the work presently and normally manufactured by employees covered by [the CBA], while giving reasonable consideration to the Company's own interests, including the profitability of its operations. The Company will . . . assign extra value in its decision-making to choices that preserve such work in the bargaining unit. As part of any "meet and confer" process undertaken pursuant to Article 27, the Company will describe the efforts made to comply with this Letter and will provide the Union the opportunity to propose other reasonable efforts, including modifications to the collective bargaining agreement, which the Company will consider in good faith. In no event will "every reasonable effort" require the Company to make a capital investment, increase the size of the workplace, or require lower profits. Id. § 2(b)(4).

Over the course of the past three years, Pratt has developed restructuring plans that contemplate the closure of Cheshire and CARO. According to those plans, it would begin relocating work from Cheshire in 2010, and close the facility in 2011. It would also begin relocating work from CARO in 2010 and close that facility in the same year. Implementation of the plans would cost approximately 832 bargaining unit employees their jobs.

The closure plans for Cheshire and CARO evolved somewhat differently. Cheshire has historically performed less well than Pratt's other engine repair facilities. In July 2008, Pratt foresaw that the national economic downturn and the merger of Delta Airlines and Northwest Airlines would likely further worsen Cheshire's results beginning in early 2010. The*fn2 supervisor of the facility, Thomas Mayes, recommended to Pratt that Cheshire be closed and the work be transferred to a facility outside Connecticut. Pratt's President, David Hess, gave his support to the closure plan in or about January 2009. Pratt requested funding for the closure plan from its parent, UTC, on February 13, 2009. With the approval of UTC, Pratt announced the plan to the Union five months later, on July 21, 2009.

In arriving at his recommendation, Mayes considered three alternatives: closing the facility but transferring the work to another bargaining unit facility in Connecticut; reducing the number of product lines at Cheshire; and allowing volume to reduce by attrition through non-renewal of customer contracts. He rejected all three, however, because they did not offer financial returns equivalent to those that would likely be achieved through closing the plant. In comparing the value of the closure plan to the value of the alternatives, Mayes did not assign extra monetary value to workforce preservation.

When Pratt presented the closure plan to UTC for approval, it also presented alternative programs that were projected to generate lower savings over a recurring period, but it did not pursue funding for any such program. In making that decision, Pratt did not assign extra monetary value to workforce preservation. It did represent ...


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