INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW), Pеtitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 24785.
United States Court of Appeals, District of Columbia Circuit.
Argued Nov. 3, 1971. Decided Jan. 25, 1972.
459 F.2d 1329
I respectfully dissent.
Mr. Steven Kahn, Atty., National Labor Relations Board, of the bar of the Supreme Court of California, pro hac vice, by special leave of court, with whom Messrs. Arnold Ordman, General Counsel at the time the brief was filed, Dominick L. Manoli, Associate General Counsel, Marcel Mallet-Prevost, Asst. General Counsel, and Herman M. Levy, Atty., National Labor Relations Board, were on the brief, for respondent.
Before WRIGHT, TAMM and ROBINSON, Circuit Judges.
Once in a great while, a case comes before this court which makes one wonder whether the judicial system is still equipped to deal with a litigant determined to frustrate the workings of justice. Unfortunately, this is such а case.
It has now been seven years since the United Automobile Workers charged the Gyrodyne Company with an unfair labor practice for discharging some 30 union members at the height of an organizing campaign. For those seven years, the company has persistently refused to release relevant documents within its control which have a vital bearing on the proceedings. These documents have been subpoenaed, and a motion to revoke the subpoena has been denied. The company‘s case has now been the subject of a lengthy hearing before a trial examiner, two Labor Board decisions, and a decision by this court. The time when an effective remedy for the discharged employees might have been afforded passed years ago. Yet as the case comes before this court for the second time, there has still been no sanction imposed on Gyrodyne for its naked, willful suppression of the documents which could conclusively prove its guilt. If one takes the maxims of equity seriously, then the judiciary should not permit a party to profit from his own wrongdoing. See, e. g., Reynolds v. United States, 98 U.S. (8 Otto) 145, 160, 25 L.Ed. 244 (1878). The time has come to stop Gyrodyne from accruing interest on its investment in intransigence.
I. The Facts
Despite the protracted character of this litigation, the facts are relatively simple. The Gyrodyne Company of America is a defense contractor specializing in the manufacture of helicopters. It employs some 800 workers in its plant in St. James, New York.1 As of 1964, when the events giving rise to the union‘s complaint occurred, its only customer was the United States Navy.2
Although previous attempts had been made to unionize Gyrodyne,3 the company was without a union when the United Automobile Workers began their organizing campaign in January 1963. The UAW‘s efforts apparently met with considerable apathy, and they remained low key until January 1964 when an intensive leafleting campaign began.4 On June 3, 1964 the union held its first open meeting, and subsequent meetings were held on June 17 and June 24.5 On June 10 the union announced that it had received enough authorization cards to petition the Board for an election.6
As the union campaign gathered momentum, the company began a course of conduct which ultimately led to the charges of unfair labor practices that are the subject of this litigation. On March 2 and 3, 1964 three Gyrodyne employees who were UAW members were discharged without warning or explanation.7 Then on June 11, one day after the union had announced its plan to petition for an election, Peter Papadakos, president of Gyrodyne, called all employees together for a speech on the company‘s prospects. Although the exact
With its organizing efforts frustrated by these discharges, the union abandoned its campaign and sought redress before the Board. The union‘s principal contention was that the men had been fired for their union activity in contravention of
In defense, the company attempted to discredit a number of the witnesses called by the General Counsel and to demonstrate that some of the individual union members who had been discharged were fired for cause.14 The company‘s principal contention, however, was that the dischаrged employees had been caught up in a general cost-cutting program which Gyrodyne had instituted at the behest of the Government.15 President Papadakos testified that he had received letters from President Johnson and Defense Secretary McNamara, similar to those sent to other defense contractors around the time President Johnson assumed office, urging him to cut costs, and that he had responded to these pleas by increasing the efficiency of his plant, thereby necessitating the loss of some jobs.16
In order to meet this “cost-cutting” defense, the General Counsel subpoenaed a number of company records, including the payroll and personnel records of all persons hired or rehired in the company‘s production departments in 1964. The hiring records were particularly vital since if they showed that the discharged union adherents had been merely replaced it would be obvious that the cost-cutting defense was no more than a sham. But despite the fact that the company‘s motion to revoke the subpoena was denied by the Board, the records were never produced. Instead, the company chose to parry the General Counsel‘s repeated requests for the documents at the hearing and to rely solely on President Papadakos’ self-serving oral state-
When the trial examiner handed down his final decision, the company‘s strategy of noncompliance seemed fully vindicated. The trial examiner chose to credit Papadakos’ testimony and accept the cost-cutting defense.18 He discounted Lieutenant Commander Scheperle‘s testimony,19 found that Papadakos’ father-in-law was an “inept stooge”20 and totally disbelieved Papadakos’ wife.21 Although the examiner had indicated during one stage of the proceedings that he might attach an adverse inference to Gyrodyne‘s defiance of the subpoena,22 he gave no weight to this defiance in his final decision. Instead, the examiner‘s opinion totally ignores the records in question and the company‘s failure to produce them. In a four-paragraph opinion, a panel of the Labor Board adopted the trial examiner‘s proposed opinion and dismissed the complaint in its entirety.23
Thereupon, the union appealed to this court, arguing, inter alia, that the Board had abused its discretion by refusing to draw the usual adverse inference from Gyrodyne‘s refusal to obey the subpoena. In our first opinion in this case, we held that “[t]he subpoenaed material appears clearly relevant”24 and that “[i]f the adverse inferences were not to be drawn, failure to do so should have been explained.”25 We therefore remanded to the Board in order that it might adopt one of three options: (1) explain its failure to draw the requested inferences, (2) draw the inferences and explain the consequences, or (3) require production of the records.26
On remand, the Board issued a notice to show cause why an adverse inference should not be attached to Gyrodyne‘s continued refusal to produce the subpoenaed records and, if it should draw such an adverse inferеnce, why it should not reverse its initial decision dismissing the complaint.27 After receiving submissions from all parties, the Board issued a supplemental decision “adher[ing] to its original Decision and Order.”28 Purporting to adopt the first alternative proposed in our opinion, the Board once again declined to attach an adverse inference to Gyrodyne‘s conduct and affirmed its decision to dismiss the complaint.29
Although the Board‘s supplemental decision discusses at length its refusal to draw an adverse inference from Gyrodyne‘s nonproduction of other, less im-
Perhaps sensing that these reasons are less than fully convincing, counsel for the Board in its brief before this court advanced five additional reasons why the inference was not drawn: (6) While the adverse inference rule can be utilized to provide cumulative evidence, it will not supply the missing elements of proof to a party who has failed to make out a prima facie case35; (7) neither counsel for the union nor the General Counsel objected to the introduction of secondary evidence to prove Gyrodyne‘s rehiring record at the hearing — the point is therefore not open on appeal36; (8) Papadakos testified as to his own personal knowledge of Gyrodyne‘s rehiring record — not as to the content of the documents not produced — therefore the adverse inference rule does not apply37; (9) neither the General Counsel nor the union requested introduction of the suppressed documents during the hearing38; and (10) even in a case where the adverse inference rule does apply, the rule is permissive only and never requires the body of first impression to draw the inference if it chooses not to do so.39
The Board‘s and counsel‘s thoroughness in uncovering every conceivable argument for the Board‘s result is commendable. Nonetheless, it seems to us that there is some danger of confusing reasons that are compelling with thоse that are merely compendious. After giving careful examination to each of the explanations offered by the Board and its counsel, we are forced to conclude that none of them justifies the action which the Board has taken. In the aggregate, they amount to no more than a continued insistence that the adverse inference rule has no relevance to the Board‘s proceedings in the face of a previous decision by this court to the contrary. It therefore becomes our duty to reverse the Board for a second time and to order it to draw the inference adverse to Gyrodyne.
II. The Adverse Inference Rule
The Board‘s complex gyrations might lead the unwary to conclude that the adverse inference rule is one of those intricate gems of the common law which is riddled with nonsensical exceptions, encrusted with gloss upon gloss, and surrounded by an arcane lore last fully explicated in a three-volume treatise published in the late 19th century. In fact, however, the rule is disappointingly free of mystery and mumbo-jumbo. Indeed, it is more a product of common sense than of the common law.
“* * * The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his оpponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavorable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also always open to explanation by circumstances which make some other hypothesis a more natural one than the party‘s fear of exposure. But the propriety of such inference in general is not doubted.”40
Although this rule can be traced as far back as 1722 when it was applied in the famous case of the chimney sweep‘s jewel,41 it has been utilized in scores of modern cases as well. See, e. g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226, 59 S.Ct. 467, 474, 83 L.Ed. 610 (1939) (“The production of weak evidence when strong is available can lead only to the conclusion that the strong would have been adverse.“); United States v. Roberson, 5 Cir., 233 F.2d 517, 519 (1956) (“Unquestionably the failure of a defendant in a civil case to testify or offer other evidence within his ability to produce and which would explain or rebut a case made by the other side, may, in a proper case, be considered as a circumstance against him and may raise a presumption that the evidence would not be favorable to his position.“); Tendler v. Jaffe, 92 U.S.App.D.C. 2, 7, 203 F.2d 14, 19 (1953) (“[T]he omission by a party to produce relevant and important evidence of which hе has knowledge, and which is peculiarly within his control, raises the presumption that if produced the evidence would be unfavorable to his cause.“).42
Given the widespread acceptance of the rule, it is hardly surprising that the Labor Board itself has used it on numerous occasions. As the trial examiner stated in Welcome-American Fertilizer Co., 169 NLRB 862, 870 (1968), in an opinion subsequently adopted by the Board and in a case which, incidentally, is virtually on all fours with this one: “Respondent‘s unexplained failure to support and substantiate its economic justification for the layoffs by the production of probative and material documentary records within the power of the Respondent to produce, renders the purported reasons dubious and also warrants drawing an inference that if such [records] had been produced, they could not have been favorable to the Respondent. This failure to produce such evidence ‘not only strengthens the probative force’ of its absence ‘but of itself is clothed with a certain probative force.‘” (Quoting from Paudler v. Paudler, 5 Cir., 185 F.2d 901, 903 (1950), cert. denied, 341 U.S. 920, 71 S.Ct. 742, 95 L.Ed. 1354 (1951).) See also Monahan Ford Corp., 173 NLRB 204 (1969); Mid States Sportswear, Inc., 168 NLRB 559 (1967); Crow Gravel Co., 168 NLRB 1040, 1047 (1967). Moreover, the courts have consistently upheld the Board when it has drawn an adverse inference from nonproduction of relevant evidence, see P. R. Mallory & Co. v. NLRB, 7 Cir., 400 F.2d
Before proceeding with a discussion of how the adverse inference rule applies to the facts of this case, we should note a few more of its general characteristics particularly relevant here. First, it is important to realize that the applicability of the rule in no way depends on the existence of a subpoena compelling production of the evidence in question. The theory behind the rule is that, all other things being equal, a party will of his own volition introduce the strongest evidence available to prove his case. If evidence within the party‘s control would in fact strengthen his case, he can be expected to introduce it even if it is not subpoenaed. Conversely, if such evidence is not introduced, it may be inferred that the evidence is unfavorable to the party suppressing it. Of course, if a party has good reason to believe his opponent has failed to meet his burden of proof, he may find no need to introduce his strong evidence. See NLRB v. A. P. W. Products Co., supra, 316 F.2d at 903. Similarly, if the other party or the judge plays a role in suppression of the evidence, the force of the inference is dissipated. See NLRB v. Drennon Food Products Co., 5 Cir., 272 F.2d 23, 27 (1959). These special exceptions should not, however, be allowed to detract from the more general, commonsense observation that in most cases a party will introduce his most favorable evidence without being compelled by legal process to do so.
But while the adverse inference rule in no way depends upon the existence of a subpoena, it is nonetheless true that the willingness of a party to defy a subpoena in order to suppress the evidence strengthens the force of the preexisting inference. Indeed, in some circumstances defiance of a subpoena may justify striking a defense, cf. Hammond Packing Co. v. Arkansas, 212 U.S. 322, 351, 29 S.Ct. 370, 53 L.Ed. 530 (1909), or completely barring introduction of evidence on the point in question. Cf.
Moreover, the adverse inference rule plays a vital role in protecting the integrity of the administrative process in cases where a subpoena is ignored. It is, of course, always possible for the opposing party to
Finally, it should be noted that, contrary to the Board‘s assertions in its brief,46 the adverse inference rule has nothing whatever to do with the separate rules requiring, under some circumstances, the production of best evidence. The best evidence requirement is an exclusionary rule which suppresses weak evidence in situations where nonproduction of best evidence is unexplained. In contrast, the adverse inference rule excludes no evidence. Moreover, again unlike the best evidence rule, the adverse inference rule need not be triggered by an attempt to introduce weak evidence. Instead, the rule allows a party to introduсe any evidence for what it is worth, but always subject to the independent inference that nonproduction of putatively strong evidence indicates that this evidence would be harmful to the suppressing party.
III. The Enforceability of the Adverse Inference Rule
The mere fact that the adverse inference rule is widely recognized and followed does not, by itself, demonstrate that the Labor Board commits reversible error when it declines to utilize it. Generally, as the dissent argues, whether to draw the inference is a matter of discretion for the fact finder. Administrative agencies are, of course, required to obey the minimal requirements of rationality, see, e. g., Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed. 2d 207 (1962), and due process, see, e. g., Ohio Bell Telephone Co. v. Public Utilities Comm‘n of Ohio, 301 U.S. 292, 301-305, 57 S.Ct. 724, 81 L.Ed. 1093 (1937). But it does not therefore follow that Wigmore‘s treatise has been incorporated by reference into the Administrative Procedure Act. Indeed, the trend has been toward freeing administrative bodies from the shackles imposed by some of the more arbitrary rules of evidence, see, e. g., John W. McGrath Corp. v. Hughes, 2 Cir., 264 F.2d 314, cert. denied, 360 U.S. 931, 79 S.Ct. 1451, 3 L.Ed.2d 1545 (1959); 2 K. Davis, Administrative Law Treatise § 14.01 (1958), and toward allowing such bodies to use “the kind of evidence on which respon-
Nonetheless, it seems to us there are several special reasons why we should continue to insist that the Labor Board apply the adverse inference rule. First, it should be noted that the movement away from the strict rules of evidence in administrative proceedings has centered on the various exclusionary rules. It has been argued with some force that it is pointless to insist on such rules, which were designed for jury trials, in situations where the trier of fact will hаve to hear the evidence in any event in order to rule on its admissibility. See Davis, Hearsay in Nonjury Cases, 83 Harv.L.Rev. 1362 (1970). But whatever the merit of this argument, it clearly has no relevance to the adverse inference rule which, as demonstrated above,48 requires exclusion of no evidence. Instead, the rule requires that evidence which might otherwise be ignored be considered — viz., the evidence that one party has suppressed relevant data and therefore might have something to hide. This is precisely “the kind of evidence on which responsible persons are accustomed to rely in serious affairs,” and therefore precisely the type of evidence which the trier of fact should consider, whether he be judge, trial examiner, or member of a jury. The argument for allowing all evidence to be admitted “for what it is worth” in administrative proceedings thus cuts in favor of the adverse inference rule rather than against it.
Second, even if it is conceded that judicial supervision of agency rules of evidence is declining, there are nonetheless some special statutory requirements surrounding the Labor Board which argue for continuing judicial vigilance in at least this one area.
Third, Gyrodyne‘s defiance of the Board‘s compulsory process makes this an especially appropriate case for judicial review. No one doubts that the Board has been given wide discretion and that courts should not lightly upset its judgments. See, e. g., Brooks v. NLRB, 348 U.S. 96, 104, 75 S.Ct. 176, 99 L.Ed. 125 (1954). But “the weight ascribed by law to the [Board‘s] findings ‘rests upon the assumption that the officer who makes the findings has addressed himself to the evidence, and upon that evidence has conscientiously reached the conclusions which he deems it to justify.‘” Cupples Company Man-
“Regulatory commissions have been invested with broad powers within the sphere of duty assigned to them by law. * * * Indeed, much that they do within the realm of administrative discretion is exempt from supervision * * *. All the more insistent is the need, when power has been bestowed so freely, that the ‘inexorable safeguard’ * * * of a fair and open hearing be maintained in its integrity. * * *”
Ohio Bell Telephone Co. v. Public Utilities Comm‘n of Ohio, supra, 301 U.S. at 304, 57 S.Ct. at 730, 81 L.Ed. 1093. Where, as here, the Board‘s refusal to consider the evidentiary inference flowing from the company‘s nonproduction of its hiring records has the effect of denying a fair hearing to one of the parties, the argument for judicial intervention becomes overpowering.
Finally, and perhaps most significantly, an argument can be made for requiring the Board to apply the adverse inference rule in this case even if the Board is under no general compulsion to follow the rule. This requirement stems from the Board‘s voluntary adherence to the rule in previous cases indistinguishable from this one in all material respects.52 To be sure, the Board has the power to overrule those decisions, and if it does so the courts will have to respect that determination so long as it meets the requirements of the relevant statutes and the Constitution. But the Board has not chosen to follow that path. Instead, it has gone out of its way to reaffirm the general applicability of the adverse inference rule and to cite with approval previous cases which have adopted it.53
It is an elementary tenet of administrative law that an agency must either conform to its own precedents or explain its departure from them. See, e. g., Secretary of Agriculture v. United States, 347 U.S. 645, 653, 74 S.Ct. 826, 98 L.Ed. 1015 (1954); Columbia Broadcasting System, Inc. v. FCC, 147 U.S. App.D.C. 175, 454 F.2d 1018 (1971). Here the agency obviously has not followed the numerous precedents which seem to require use of the adverse inference rule.54 When this case came before us for the first time, we therefore elected to remand it to the Board so that the Board could explain its failure to follow the rule. On remand, however, the Board neither overruled its prior decisions nor effectively distinguished them. As indicated below, the reasons advanced for ignoring the rule in this one case range from unconvincing to trivial. If we were forced to accept such reasons, the remand would be revealed as a meaningless formality, and the requirement of administrative rationality and consistency as no more than a hollow sham.
Judicial supervision to ensure that agencies are “faithful and not indifferent to the rule of law”55 is too vital for us to be satisfied with a few illogical or hastily concocted rationalizations. Nor does the adverse inference rule rest
IV. The Board‘s Explanations
On its face, this case appears to be a textbook example of a fact situation which fairly begs for application of the adverse inference rule. It can hardly be doubted that Gyrodyne‘s hiring records are vitally relevant to this litigation and, indeed, we do not understand the Board to contest this proposition. If those records showed that the company had not replaced the men fired in 1964, Gyrodyne‘s cost-cutting defense would be substantially strengthened. Thus when Gyrodyne chose to suppress the records in the face of the General Counsel‘s assertion that they would show that the men had been replaced, it is only natural to suppose that the records would have been harmful to Gyrodyne‘s case. Moreover, this inference is further strengthenеd by Gyrodyne‘s defiance of the subpoena even after the petition to revoke had been denied and by the company‘s blatantly evasive tactics at the hearing.56
Nonetheless, the Board purports to find a plethora of reasons for its failure to apply the adverse inference rule. None of these reasons will withstand even cursory analysis, however, and some of them seem to be based on a total misapprehension of what the adverse inference rule is all about. For example, the Board contends that the rule is inapplicable because the trial examiner believed Papadakos was telling the truth when he asserted that the discharged men had not been replaced. It is, of course, obvious that this “reason” begs the very question to be decided. The principal factual question before the trial examiner was whether the testimony of Papadakos was truthful. One of the tools available to the examiner in evaluating the truthfulness of that testimony was the adverse inference rule. Yet the Board persists in arguing that the rule is inapplicable because it has already decided that question without applying the very rule which was supposed to be an aid in decision. Stripped of its verbal accessories, this formulation amounts to the barefaced assertion that the rule is inapplicable because the Board chose not to apply it. Such tautologies may be quite effective when dealing with a stubborn two-year-old, but they are hardly the type of argument conducive to persuading a court of law.
Next, the Board argues that it should not be required to apply the rule because Gyrodyne did produce many of the documents which were requested of it and because the General Counsel did not use some of the documents which Gyrodyne did produce. But the fact that Gyrodyne graciously condescended to obey part of the Board‘s subpoena in no way changes the fact that it remains in flagrant violation of the rest of it. It has never been thought that a party is free to pick and choose which parts of a subpoena it will obey and which parts it can ignore. Indeed, if anything, Gyrodyne‘s policy of selective obedience reinforces the adverse inference since it demonstrates that the company was quite capable of coming forward with evidence when it was favorable to its cause. Nor do we know of any cases holding that the party who subpoenas documents must introduce them on pain of losing the
The Board then changes tack and argues that even if the adverse inference were drawn there would still not be a sufficient evidentiary basis for reversing the original decision. It seems to us, however, that it is insufficient for the Board to speculate on the possible results if the inference were drawn. Rather, absent a valid reason for bypassing the rule, the inference should actually be drawn and its impact evaluated. While this requirement may seem like no more than a technicality, it in fact has some important consequences. If the Board had actually drawn the inference, it would have had to conclude that the company‘s records would have shown that the discharged men were in fact replaced. This conclusion leads, in turn, to the further conclusions that Papadakos had perjured himself on the stand and that the cost-cutting defense was a blatant sham. To be sure, these propositions are not, in themselves, sufficient to make out a
Finally, the Board concludes the explanation of its refusal to draw the inference with a crowning non sequitur. There is no need to draw the inference, the Board argues, since there was adequate opportunity to enforce thе subpoena in the District Court. If we were to take this theory seriously, it would mean that the adverse inference rule could never apply in a case where the suppressed evidence had been subpoenaed. Since it is presumably always open to a party to enforce his subpoena, there would never be reason to attach an inference to nonproduction of evidence covered by the subpoena. Yet, as demonstrated above, to the extent the existence of a subpoena has been thought to have anything to do with the adverse inference rule in the past, it has strengthened rather than weakened the inference. Surely a party should not be in a stronger position because he has willfully defied a subpoena than he would be in if he merely failed to introduce evidence which had not been subpoenaed. Yet by carving out an exception to the adverse inference rule for cases where the suppressed evidence is covered by an outstanding subpoena, the Board produces precisely this result.
Moreover, the suppressed premise in the Board‘s reasoning — that the subpoena was in fact readily enforceable in the District Court — is hardly apodictic. In fact, there are numerous cases holding that the charging party does not have standing to enforce a Board subpoena in collateral proceedings. See, e. g., Wilmot v. Doyle, supra; NLRB v. Selwyn Shoe Manufacturing Co., supra, 428 F.2d at 224-225. The union‘s only remedy in the face of the company‘s intransigence and the Board‘s refusal to draw an inference from that intransigence was to continue with the hearing and then to assign as error the Board‘s failure to enforce the subpoena in a subsequent petition to reverse the Board‘s decision. True, it was open to the General Counsel to petition for immediate enforcement of the subpoena. But we can see no reason why the union should be penalized because of the General Counsel‘s laxity.
Nor do we see a justification for requiring either the union or the General Counsel to utilize the cumbersome and time-consuming enforcement procedure when there was an alternative, well recognized means available for vindicating the Board‘s power to require production of relevant documents. Cf. NLRB ex rel. Kohler Co. v. Gunaca, E.D.Wis., 135 F.
Since none of the reasons advanced by the Board justifies the action which it took on remand, the Board‘s supplemental decision must be reversed. We note, however, that in its brief before this court counsel for the Board has offered some additional justifications for the failure to draw the inference which do not appear in the Board‘s opinion. Under well established principles of administrative law, we would be justified in ignoring these new reasons altogether. See, e. g., Burlington Truck Lines, Inc. v. United States, supra, 371 U.S. at 168, 83 S.Ct. 239, 9 L.Ed.2d 207; Securities & Exchange Com‘n v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947); Columbia Broadcasting System, Inc. v. FCC, supra, 147 U.S.App.D.C. at 190, 454 F.2d at 1033. Had we desired counsel‘s reasons why the Board might have decided in the way it did rather than the Board‘s reasons why it actually did so decide, a remand would hardly have been required. It is, however, unnecessary for us to rest on this salutary administrative law requirement, since in fact counsel‘s reasons for the failure to draw the inference are no more persuasive than the Board‘s.
Counsel first suggests that the adverse inference rule cannot be utilized by a party, such as the union, who has failed to produce a prima facie case without the rule. This suggestion is totally without merit. First, it should be noted that, although counsel confidently states this rule as if it were part of the organic law of the land, there is in fact substantial authority to the contrary. See, e. g., Tendler v. Jaffe, supra, 92 U.S.App.D.C. at 6-7, 203 F.2d at 18-19. Cf. Welcome-American Fertilizer Co., supra, 169 NLRB at 870. But see Transcontinental Gas Pipe Line Corp. v. Mobile Drilling Barge, 5 Cir., 424 F.2d 684 (1970).
Of course, in a situation where a party has good reason to believe he will prevail without introduction of all his evidence, it would be unreasonable to draw any inference from a failure to produce some of it. But where, as here, the ultimate decision of the trial examiner remained in doubt until the end, it might well be assumed that the parties will do everything in their power to ensure that that decision will be favorable to them. Cf. NLRB v. A. P. W. Products Co., supra, 316 F.2d at 903-904. In this situation, some courts have found it proper for a tribunal to place a production burden on the party controlling vitally relevant evidence. These courts have treated failure to produce as giving rise to an inference that the suppressed evidence would be unfavorable to the suppressing party — an inference which can aid the other party in making out a prima facie case.
But whatever the abstract merits of limiting the adverse inference rule to situations where the party benefiting from it has made out a prima facie case,
Next, counsel for the Board contends that the adverse inference rule is inapplicable because the union and the General Counsel neither objected to introduction of secondary evidence as to Gyrodyne‘s rehiring record nor requested introduction of the suppressed documents. We are forced to conclude from these arguments that the Board‘s counsel totally misconceives both the purpose and the content of the adverse inference rule. Of course, the General Counsel did not object to production of the secondary evidence, since no valid ground existed for such an objection. As explained above, the adverse inference rule does not exclude any evidence. Gyrodyne was perfectly free to prove its rehiring record by secondary evidence, and whether it chose to do so or not has no effect on the applicability of the adverse inference principle. That principle is triggered by the mere fact that strong evidence which Gyrodyne chose not to use was in existence. It has nothing whatever to do with the evidence which Gyrodyne did choose to use. Nor does the General Counsel‘s alleged failure to request production of the suppressed documents affect the adverse inference which naturally adheres to Gyrodyne‘s conduct. In fact, while the record is not perfectly clear, it appears that thе General Counsel did request production of the documents.58 Although the General Counsel might have been more careful in following the legal niceties necessary to preserve the point on appeal, his persistent questioning about the documents was at least sufficient to put Gyrodyne on notice that he had an active interest in them. Surely by the time of the first
remand, when the documents had been subpoenaed, requested at the hearing, and then been made the basis of a reversal in this court, Gyrodyne must have known that the General Counsel and the union wanted them made part of the record.
Moreover, even if we assume for the moment that the General Counsel failed to request production of the records, this assumption in no way excuses the Board‘s refusal to draw the inference. As explained above, the adverse inference rule is based on the belief that a party will introduce all relevant evidence which is favorable to him on his own initiative. If a piece of evidence appears clearly relevant but the party without explanation nonetheless fails to introduce it, it must be inferred that that evidence would be unfavorable to him. Thus the adverse inference rule has been applied in countless cases where the party benefiting from it never requested production of the suppressed evidence. See, e. g., Transcontinental Gas Pipe Line Corp. v. Mobile Drilling Barge, supra; Washington Gas Light Co. v. Biancaniello, 87 U.S.App.D.C. 164, 183 F.2d 982 (1950). Given the clearly relevant сharacter of the rehiring records, we can see no reason why Gyrodyne would not have come forward with them of its own volition if they had supported its case.
The final two arguments offered by counsel for the Board may be summarily disposed of. Counsel suggests that the adverse inference rule is inapplicable because Papadakos testified as to his own knowledge of Gyrodyne‘s rehiring record rather than as to the content of the suppressed documents. But this argument once again evidences a fatal confusion between the adverse inference rule and the quite distinct best evidence rule. In terms of the adverse inference rule, it makes not a whit of difference what Papadakos testified to or, indeed, whether he testified at all. Regardless of what other testimony was in the record, the fact remains that Gyrodyne had
Finally, counsel for the Board argues that the adverse inference rule is permissive only and need not be applied if the trier of fact chooses to ignore it. Counsel takes this position in the teeth of our first opinion, in which our dissenting brother concurred, which remanded the case to the Board on the premise that the Board had to show valid reasons for not applying the adverse inference rule. Surely the panel in remanding did not intend that the Board‘s reasons be accepted however irrational they might be. More fundamentally, counsel‘s argument ignores the underlying supposition upon which the vast structure of administrative law is built. It has always been assumed that administrative agencies are not authorized to act arbitrarily and capriciously and that they, unlike juries, are required to give rational reasons for their decisions. In this connection, it should be noted that the dissent‘s citation of cases holding that the rule is voluntary in jury cases is wholly inapposite. In fact, there are numerous cases which refer to the rule as involving a rebuttable presumption. See, e. g., United States v. Roberson, supra, 233 F.2d at 519 (failure to produce relevant document “may raise a presumption that the evidence would not be favorable“); Tendler v. Jaffe, supra, 92 U.S.App.D.C. at 7, 203 F.2d at 19 (failure to produce “raises the presumption that if produced the evidence would be unfavorable“). Cf. Interstate Circuit, Inc. v. United States, supra, 306 U.S. at 226, 59 S.Ct. at 474, 83 L.Ed. 610 (“The production of weak evidence when strong is available can lead only to the conclusion that the strong would have been adverse” (emphasis added).). A presumption, of course, is mandatory unless reasons affirmatively appear for not applying it. See H. C. Black, Law Dictionary 1349 (4th ed. 1957). But even if we assume that the rule is merely
permissive for juries, that fact in no way excuses arbitrary conduct by an administrative agency. Juries are by their nature discrete entities whose decisions set no precedent and whose mode of operation is deliberately insulated from judicial review. In contrast, administrative agencies must act within the context of their own decisional law, must consider all the probative evidence put before them, and must give reasons for their decisions. See e. g.,
There may, in fact, be occasions when valid reasons exist for not applying the adverse inference rule. Cf. NLRB v. Drennon Food Products Co., supra. But saying that the rule can be ignored for no reason is tantamount to saying that it is not a rule at all. Having rejected the other nine reasons advanced by the Board and its counsel, we are not about to validate the Board‘s conduct for the “reason” that that conduct is supported by no reason.
V. Disposition
We come, finally, to the question of remedy. From the discussion above, it should be clear that the Board‘s refusal to draw an adverse inference from Gyrodyne‘s suppression of the rehiring records cannot be allowed to stand. However, this conclusion alone does not dictate the choice of any particular procedure to follow our second remand. It would be possible, for example, for us to return the case to the Board for reconsideration in light of this opinion. Alternatively, we could order the Board to seek enforcement of the subpoena in the District Court, or order the Board to draw the adverse inference and evaluate the consequences.
After giving the matter careful consideration, however, we have decided to adopt none of these alternatives. When “[t]he administrative conduct reflected in [the] record is beyond repair,” Office of Communication of United Church of Christ v. FCC, 138 U.S.App.D.C.
“Delay is especially troubling because it allows the party charged with committing an unfair labor practice to harass or injure the charging party with relative impunity by prolonging adjudication. * * * [T]he wilful violator who acts in bad faith has the power to postpone any relief for four or five years. Even then the sanction will merely be enforcement of a Board order directing him to cease and desist from his unlawful practices. Thus, the present system invites a rational person to improve his own position by violating the law and absorbing the half-hearted reprimand.”
Note, NLRB Power to Award Damages in Unfair Labor Practice Cases, supra, 84 Harv.L.Rev. at 1673.
To be sure, there is something to be said as well for the glacial grandeur of the law. And clearly a party should never be deprived of his substantive rights because a court or agency is anxious to clear its docket. But to say that Gyrodyne has already had its day in court would be something of an understatement. It has now had seven years in court. Through its deliberate foot-dragging and continued defiance of the Board‘s supposedly compulsory process, the company has deprived the union of its right to a fair and expeditious resolution of its complaint.
We do not mean to suggest, however, that we are ordering the cost-cutting defense stricken as punishment for Gyrodyne‘s prior conduct. Rather, this disposition flows naturally from the adverse inference which the Board must attach to the company‘s refusal to produce the documents in question. The only rational inference which the Board could draw from the unexplained nonproduction is that the documents would show that Gyrodyne had in fact hired men to replace those whom it discharged. Such a showing — contained in the company‘s own records — would make it irrational to believe Papadakos’ self-serving oral declaration to the contrary. In light of this finding, it is no longer possible for the Board to accept Gyrodyne‘s cost-cutting defense. If the Board finds — as it now must — that the discharged men were replaced, then it cannot rationally believe the men were discharged in order to save money. It follows that Gyrodyne‘s cost-cutting defense must be stricken. Cf. Hammond Packing Co. v. Arkansas, supra.
While this result may seem harsh to Gyrodyne, the company must bear the responsibility for its own intransigence. Had Gyrodyne produced the records either when they were first requested or after our first remand, it would have been unnecessary for us to deal so firm-
By permitting Gyrodyne a last chance to come forward with the documents, however, we do not mean to suggest that the proceedings may be delayed indefinitely while Gyrodyne ponders its decision. We have seen quite enough pondering — and not nearly enough deciding — already. Therefore, the Board should allow the company 30 days to produce the rehiring records. If, by the end of that time, the company has still not come forward with the evidence, the consequences outlined above should swiftly follow.59
None of this is to say that the Board must find that Gyrodyne has committed an unfair labor practice. It is still open to the Board to accept Gyrodyne‘s other defenses and to conclude that the statute has not been violated. In evaluating these other defenses, however, the Board should take into account the fact that Papadakos’ testimony as to the company‘s rehiring record has now been thoroughly impeached and that he therefore may not be the most reliable of witnesses. The Board is further put on notice that any decision which it makes will be subject to review to assure that it is rational and that it is supported by substantial evidence in the record as a whole. Cf. Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951).
The Board‘s ultimate authority to resolve this controversy thus remains intact. It retains the power to judge credibility, make findings of fact, and apply the law to those findings. It is only because the Board inadvertently became enmeshed in Gyrodyne‘s deliberate attempt to obstruct justice that its previous decisions in this case were overturned. The reversals of Board decisions in this context should not be seen as an invasion of its authority. On the contrary, only after parties have learned that they have nothing to gain from defiance and delay will the Board‘s ultimate authority to enforce the National Labor Relations Act be vindicated. After 35 years, there are apparently some parties who have still not learned that lesson. We remain hopeful that Gyrodyne will be the last pupil who is forced to learn it the hard way.
One last word. Perhaps the most remarkable thing about this case is that after seven years it is still in litigation over the question whether the Board was justified in crediting the testimony of the president of the company as to the company‘s hiring records while that president continues to defy a Board subpoena to produce those records. A layman, unfamiliar with the esoteric mystery of the law but well fortified with common sense, might well say: “No wonder the Board and this court are behind in their work.”
Reversed and remanded with instructions.
TAMM, Circuit Judge (concurring in part, dissenting in part):
The National Labor Relations Board (hereinafter the “Board“) is permitted
The adverse inference rule speaks to a permissive inference which may be drawn by the trier of fact, not a mandatory inference which an appellate tribunal directs must be drawn. Although the rule has been applied in the areas of criminal,2 civil,3 and administrative law,4 it has been consistently treated as a permissive one invocable by the trier of fact.5 See, e. g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 226, 59 S.Ct. 467, 83 L.Ed. 610 (1939) (failure to call witness “is itself persuasive“); Tendler v. Jaffe, 92 U.S.App.D.C. 2, 7, 203 F.2d 14, 19 (1953) (“aids the case“); Washington Gas Light Co. v. Biancaniello, 87 U.S.App.D.C. 164, 167, 183 F.2d 982, 985 (1950) (“permits” the inference); NLRB v. Wallick, supra, 198 F.2d at 483 (Board “warranted” in drawing inference).
Professor Wigmore states the rule as follows: “The nonproduction of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its [tenor is unfavorable to the party‘s cause].” 2 J. Wigmore, Evidence § 285, p. 162 (3rd ed. 1940) (Emphasis supplied). Where there has been a failure to produce, Professor Jones states the “court may properly instruct the jury that they may infer that the documentary evidence would have operated unfavorably to the party refusing to produce it.” 1 B. Jones, Evidence, § 28, p. 62 (5th ed. 1958) (Emphasis supplied).
In speaking of inferences this court has stated that it is a “conclusion which the jury is permitted, but not compelled, to draw from the facts.” Bray v. United States, 113 U.S.App.D.C. 136, 140, 306 F.2d 743, 747 (1962) (Emphasis in original). See United States v. Johnson, 140 U.S.App.D.C. 54, 63-64, 433 F.2d 1160, 1169-1170 (1970); Pendergrast v. United States, 135 U.S.App.D.C. 20, 30-33, 416 F.2d 776, 786-789 (1969); Black‘s Law Dictionary 917 (4th ed. 1957) (“An inference being a deduction which the trier may or may not make according to his own conclusions.“).
The law is succinctly stated in Aetna Casualty & Surety Co. v. Smith, 127 A. 2d 556 (D.C.Mun.App. 1956):
Assuming there was sufficient foundation for an unfavorable inference of this kind, the fact that the trial court failed to draw the inference constitutes no error reviewable on appeal. The inference arising from the refusal or unexplained failure to produce relevant documentary evidence is permis-
sive in nature, and is merely another factor which may be given consideration by the trier of the facts when weighing the evidence and determining the credibility of witnesses.
* * * * * * *
The trial court could have drawn an unfavorable inference, but it was not required to do so and apparently chose not to. Failure of the trier of the facts to draw an inference, permissible in nature, cannot be advanced to an appellate court as a ground justifying reversal of the judgment.
Id. at 559. See also Edwards v. Zahner, 395 S.W.2d 185, 191 (Mo.1965); Sorby v. Three Rivers Motors, 178 Pa.Super. 187, 114 A.2d 347 (1955).
An inference is within the discretion of the trier of fact. Congress has placed the authority to draw inferences in the Board not the courts. NLRB v. Link-Belt Co., 311 U.S. 584, 597, 61 S.Ct. 358, 85 L.Ed. 368 (1941); NLRB v. Falk Corp., 308 U.S. 453, 461, 60 S.Ct. 307, 84 L.Ed. 396 (1940). Decisions, “beyond [the] possibility of misunderstanding, have repeatedly reminded us that the power to draw inferences was entrusted to the Board and not to the courts.” NLRB v. American Creosoting Co., 139 F.2d 193, 195 (6th Cir. 1943). See Standard Generator Serv. Co. v. NLRB, 186 F.2d 606, 607 (8th Cir. 1951); NL RB v. Mt. Clemens Pottery Co., 147 F. 2d 262, 264 (6th Cir. 1945). Indeed, the right has been denominated “unquestionably exclusive.” NLRB v. Austin Co., 165 F.2d 592, 596 (7th Cir. 1947). Notwithstanding the majority‘s assertion that several decisions “suggest” that a court might reverse the Board for failing to draw an adverse inference, not a single decision cited by the majority does so.6 Nor is there a decision cited wherein a court ordered the Board to draw an adverse inference.7
Moreover, the decisional law is supported by the facts in the instant case. The Board justifiably refused to draw the inference8 because inter alia credited
The majority itself alludes to the type of evidence in dispute here as that “which the trier of fact should consider, whether he be judge, trial examiner, or member of a jury.” It is submitted that this is precisely what transpired. The trier of fact after due consideration concluded that the adverse inference rule should not be applied to the particular facts at bar. We should not substitute our judgment for that of the Board‘s.
Moreover, the Board in its supplemental decision stated:
Even assuming, arguendo, adverse inferences were to be drawn from the Respondent‘s failure to produce, we nevertheless do not believe that such inferences as could be drawn would produce a sufficient evidentiary base for reversing our Decision herein, particularly in view of the Trial Examiner‘s credibility findings which were based on evidence subsequently adduced by the Employer. (Supp.App. 39.)
The majority chides the Board for “speculating” on the possible results of an adverse inference and yet with necromantic elan goes on to do precisely that which it had just condemned by itself engaging in speculation.
Judicial review of administrative decisions is narrowly circumscribed in order to encourage autonomy and allow grеater expression to agency expertise. Unfortunately, the decision of the majority abnegates the traditional respect we have accorded agencies as “collaborative instrumentalities of justice.”11 I respectfully dissent.
NORTHERN INDIANA BROADCASTERS, INC., Appellant, v. FEDERAL COMMUNICATIONS COMMISSION, Appellee, South Bend Tribune, Michiana Telecasting Corporation, Intervenors.
No. 24071.
United States Court of Appeals, District of Columbia Circuit.
Argued Nov. 3, 1971. Decided Jan. 21, 1972.
Notes
Regarding a list of employees rehired, the record shows and the testimony was credited, that none of the laid off or discharged employees were subsequently rehired. There was also credited testimony that further terminations had taken place subsequent to the alleged discriminatory discharges which were not even alleged as discriminatory. And the record discloses that the total number of employees dropped substantially from the time of the alleged discriminatory layoffs until the time of the hearing. (Supp.App. 38). See also Supp.App. 9, 24, 27.
The cases cited in connection with our assertion also support it. In Selwyn Shoe the 8th Circuit found it unnecessary to rely on the General Counsel‘s failure to produce subpoenaed documents in order to sustain a reversal of the Board‘s finding, since that finding was not supported by substantial evidence in any event. See 428 F.2d at 222-223. Nonetheless, the Selwyn Shoe court made clear that reversal would have been justified if the company had been prejudiced by the failure to draw the inference:
“In his Decision the Trial Examiner drew no inferences unfavorable to Solter because of her refusal to honor the subpoena since ‘she was apparently acting upon the advice of General Counsel.’ * * *
“The Company contends that the willful, improper and prejudicial conduct of General Counsel, a party to this proceeding, by his interference with the Board‘s subpoena process, by his instruction to Solter not to produce the subpoenaed data, and by his withholding subpoenaed documentary evidence of the witness which was in his custody, denied the Company a fair hearing and due process and warrants dismissal of the consolidated complaint. * * *
“Whether General Counsel‘s refusal to produce Solter‘s notebooks which were in his possession warrants dismissal of the consolidated complaint depends on whether prejudice has resulted to such an extent as to vitiate the entire proceedings. * * *
“In reviewing an order of the NLRB dismissing a complaint charging a company with various unfair labor practices, the Court of Appeals for the District of Columbia recently remanded a case to the Board because it failed to explain why it did not draw unfavorable inferences against the company because of the company‘s continued refusal to produce records subpoenaed by the Trial Examiner after the company‘s motion to revoke the subpoena was denied. [Citing our previous decision in this case.] In the instant case, the Trial Examiner (and the Board obviously concurred) drew no inferences unfavorable to Solter from her refusal to produce because she was apparently acting under the advice of the General Counsel. While we are inclined to agree with this factual characterization excusing Solter‘s initial conduct, we do not think this conclusion resolves the question of prejudice to the Company.”
428 F.2d at 224-225. (Emphasis added.) While it is true that the Selwyn Shoe court relied in part on the General Counsel‘s status as a public official rather than a mere adversary in reaching these conclusions, its citation of our previous decisiоn — in which the General Counsel was not responsible for suppression of the documents — makes clear that this factor was in no way determinative.