Mosey Manufacturing Company, Inc. v. National Labor Relations BoardMosey Manufacturing Company, Inc. v. National Labor Relations Board
Lead Opinion
We ordered reargument of this case en banc before issuance of a panel opinion (see Circuit Rule 16(e)) in order to resolve a conflict among panels of this circuit over whether the proper standard of judicial review in cases involving the Labor Board’s application of its election rules to particular facts is abuse of discretion or substantial evidence on the record as a whole.
On June 10, 1977, the carpenters’ union was elected the collective bargaining representative for a unit of Mosey Manufacturing Company’s workers. The election was decided by one vote. The company, alleging union misconduct in the election campaign, refused to bargain with the union. The union filed an unfair labor practice charge with the Board, a complaint was issued, and the Board issued an order finding that the company had committed an unfair labor practice and ordering it to bargain with the union.
Two months before the election the Board had held, in Shopping Kart Food Market, Inc.,
In April 1978 the Board applied to this court for enforcement of its order against Mosey. Shortly before oral argument, the Board decided General Knit of California, Inc.,
On remand the administrative law judge found that the union had made a material misrepresentation which in light of the close vote made the election invalid. The Board reversed. It found there had been no misrepresentation and in any event it had not been material. The Board reinstated the bargaining order and again applied to this court for enforcement. After the oral argument, but before the panel handed down a decision, the Board decided Midland Nat'l Life Ins. Co., 263 N.L.R.B. No. 24,
The Board’s counsel urges us to enforce the Board’s order on the basis of the Shopping Kart standard. We could not do this even if we were certain that the Board wanted that standard applied to this case. Mosey has never had judicial review of the Board’s original order, which was based on the Shopping Kart standard. In this (the second) round of review proceedings, the parties, unaware of the extent of the Board’s fickleness, thought the applicable standard would continue to be that of Hollywood Ceramics and did not brief or argue the case under Shopping Kart. The company’s brief- does mention the threats of physical violence that were the focus of its complaint when Shopping Kart was the ruling standard, but pushes them to the periphery of its argument; the core is misrepresentation. To decide this case under Shopping Kart we would have to dredge up the briefs that the parties filed in this court in 1978 or, more appropriately in view of the lapse of time, allow the parties to rebrief and reargue the issue.
But even this would not be good enough if it turned out that the company, while not entitled to relief under Shopping Kart, was entitled to relief under Hollywood Ceramics. True, the Board has said it will apply its new rule — the resurrected Shopping Kart rule — to all pending cases, and this is a pending case; and we may assume, as no contrary argument is made, that the Board has the broadest power to make rules for election disputes, to change those rules, to apply a changed rule retroactively, and to do all this in adjudicative decisions rather than in formal rulemaking proceedings. But cf. NLRB v. Majestic Weaving Co.,
A shorter Board-caused delay in an election that was not nearly so close persuaded the Second Circuit recently to deny enforcement of the Board’s bargaining order outright rather than to remand, NLRB v. Connecticut Foundry Co.,
A week before the election the union told Mosey’s workers that it could get them a 10 percent raise because it had gotten such a raise for workers at another plant. It had not; the raise had only been 5 percent. The Board found, on the basis of an argument that its General Counsel had not thought worth making to the administrative law judge, that the raise was 10 percent if certain cost of living increases were included. Even so, the union’s failure to explain this qualification was misleading; it allowed Mosey’s workers to think that the union would get them 10 percent above whatever cost of living increases they could expect to receive anyway in a period of high inflation (as 1977 was) — and had received, before the union came on the scene. So there was misrepresentation, it concerned a matter of vital interest to workers (“Among the various types of campaign misrepresentations, the courts have been least tolerant of distortions involving wages,” Peerless of America, Inc. v. NLRB,
These facts persuaded the administrative law judge that the election should be set aside under Hollywood Ceramics; the Board’s contrary conclusion is not, in our judgment, supported by substantial evidence on the record as a whole. But neither is it so egregious, so unreasonable, that it is an abuse of discretion — assuming that this is a distinct, and narrower, standard of review than substantial evidence. The assumption is necessary, since if the standards are the same the Board’s order is invalid under either.
Abuse of discretion is the standard of review of findings in election cases in the First, Fourth, and Tenth Circuits, see NLRB v. S. Prawer & Co.,
In this circuit, a number of decisions apply the abuse of discretion standard: Macomb Pottery Co. v. NLRB,
Obviously the issue should not be settled by counting noses, even distinguished judicial ones. We have to take a fresh look at the issue and we begin by observing that the statute which governs judicial review of Labor Board orders, section 10(e) of the National Labor Relations Act, 29 U.S.C. § 160(e), states that the Board’s findings of fact shall be conclusive provided they are “supported by substantial evidence on the record considered as a whole.” There is no express exception for unfair labor practice cases growing out of representation elections and no obvious reason why the courts should imply one. The finding that a statement made in an election campaign was true, or substantially true, or if false immaterial is the kind of factfinding that normally is reviewed under the substantial evidence standard, whether in a securities case, see, e.g., TSC Industries v. Northway, Inc.,
It is true but irrelevant that direct judicial review of the Board’s decision to certify a collective bargaining representative on the basis of an election is extremely limited. The purpose is to prevent delay, rather than to narrow the scope of judicial review of the decision in the event the employer refuses to bargain .with the union and an unfair labor practice action is brought against him. See section 9(d) of the Act, 29 U.S.C. § 159(d); Boire v. Greyhound Corp.,
We may assume that the soundness of an election rule is not the business of the reviewing court. But it is its business to make sure that the rule is applied to the facts in a responsible fashion, and this traditionally has meant in accordance with the substantial evidence standard. It makes no difference whether the rule comes from Congress directly or through its delegate, the Board, indirectly. The Board does not have a broader discretion in devising election rules than Congress itself would have; yet even if the rule had come from Congress the substantial evidence standard would be used to determine whether the Board was applying the rule correctly. Judicial review should not be more limited just because the Board rather than Congress is the rulemaker.
Moreover, the abuse of discretion standard is out of place here. It is meant for the review of decisions that have one or more of the following characteristics: the factors that are supposed to dominate the decision cannot be evaluated by the reviewing court; the decision is supposed to be made on the basis of subjective rather than objective factors — the individual judgment of the judge or administrator, rather than some articulable legal standard; uniformity among decisions is not important. See Noonan v. Cunard S.S. Co.,
The two Board findings challenged in this case — that the union’s claim of what it had done for workers at another plant was not false, and that if it were false it would not be likely to sway the election— are factual in nature, and being unsupported by substantial evidence on the record as a whole are invalid. That means that if this case is governed by the Hollywood Ceramics standard, under which elections are set aside if there are material misrepresentations in the campaign, the Board’s order must be set aside. Midland suggests that the Board probably, but not certainly, would apply the Shopping Kart standard to this case instead, because it is a pending case. Hence if there were no problem of Board-caused delay, we would not deny enforcement on the basis of Hollywood Ceramics but would remand the case for the Board to decide whether to apply its new standard. Since the long delay in this matter due to the Board’s indecision has persuaded us that the case should not be remanded, that leaves us with no choice but
Enforcement Denied.
Concurrence Opinion
concurring.
I fully concur in the denial of enforcement of the Board’s order, but in the partic
This story began back in 1977, over five years ago, when the disputed representation election was held. Mosey Mfg., a modest sized company, then had 72 production and maintenance employees eligible to vote. The union won by one vote, but the company refused to bargain because of various alleged deficiencies of the Board and union.
This case first came here for enforcement consideration in 1977, but we felt compelled to remand, observing that the applicable area of labor law was “recently subjected to great flux.” N.L.R.B. v. Mosey Mfg. Co., Inc.,
From 1962 to 1977 the standard articulated in Hollywood Ceramics Co.
The case therefore was sent back to the Board which in turn reinstated its bargaining order, and has now come back again to have this court enforce the order. So, this court heard oral argument again, but not long after that and before the matter could be decided, the Board, in Midland Nat’l Life Ins. Co.,
Five years ago one employee of this company cast the deciding vote in the contested election. Who the employees of Mosey Mfg. may be today, or what their thoughts may be about their own representation, we have not the slightest idea. One way to find out, however, is to give the current employees the opportunity to have a new election, if they so choose, so that they may have some voice in their own futures. The circumstances of this case are reason enough, I believe, to cut through it all directly to that end. If any problems were to arise during a new election, those problems optimistically could be resolved on an expedited basis by the Board, and by this court if necessary.
The Board admittedly has the right to change its mind, but there must be a limit to the Board’s right to impose the burdens of its own unstable expertise on others, employees, employers, and courts alike.
Notes
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. 263 N.L.R.B. No. 24,
Dissenting Opinion
dissenting.
T join fully in Judge Swygert’s persuasive dissent. The majority has engaged in an extraordinary exercise of judicial activism in essentially substituting its judgment for that of the Board on what would sway a union election. I write separately to stress two points.
First, I see no reasonable basis for uncertainty about whether the Board would want the Shopping Kart standard and not the Hollywood Ceramics standard applied to
Second, even if remand were necessary, I am not so certain as the majority apparently is that application of “equitable” principles should preclude such a remand. I am certain, however, that the equities are not one-sidedly in favor of the employer. Strikingly absent from the majority’s discussion of equity is any recognition that denying enforcement of the bargaining order subjects the employees to further delays in effectuating their right to collective representation. The majority’s assumption that “[t]he best protection for these workers’ freedom of choice would be a prompt new election,” supra at 613, ignores the fact that, notwithstanding the Board’s changes in standards, the employer in this case was able to negate the employees’ choice from June 10, 1977, the date of the election, until at least March 27, 1979, the date of our first review of this election, a review to which the employer is of course entitled.
In sum, I see nothing equitable about a result which, when all is said and done, results in these employees losing their statutory right to representation because the majority is annoyed at the “fickleness” of the Board. I think that such an outcome has no sanction in the Act or in the decided cases.
Therefore*-1 respectfully dissent.
with whom Circuit Judge CUDAHY joins, dissenting.
This case has been buffeted by the alternating tides of the National Labor Relations Board’s decisions to invalidate labor elections during which last-minute, material, substantial misrepresentations are made, see General Knit of California, Inc.,
A majority of this court now holds that enforcement of the bargaining order must be denied, reasoning that because the result of our review would differ depending on which of the Board’s two tests is applied, and because we do not know which test the Board would choose to apply in this case or how it would evaluate the company’s non-misrepresentation objections, remand to the Board would be necessary; and that the resulting delay would so compound the existing delay from the date of the election that any future appeal to enforce would lack equity. This rationale rests on four premises: first, that the Board’s decision to uphold the election under the Hollywood Ceramics standard is not supported by substantial evidence; second, that remand is necessary to determine whether the Board would apply Midland retroactively to this case; third, that remand is necessary to allow the Board to evaluate the company’s other objections; and fourth, that lapse of time is a sufficient basis to deny enforcement of the bargaining order. Because I disagree with each of these premises, I respectfully dissent.
I
The Board’s decision that the election was valid under the Hollywood Ceramics criteria is faultless. The majority properly identifies our standards of review: as in other contexts, Board rules must be upheld unless it was an abuse of discretion to adopt them, and adjudications applying those rules must be upheld if they are supported by substantial evidence. Having identified the standards, however, the majority fails to identify the Board rule in question precisely and fails to detail in what respect substantial evidence for its adjudicatory decision is lacking.
Hollywood Ceramics established, as the majority correctly notes, that laboratory conditions may be spoiled by material misrepresentations preceding an election. More particularly,
the Board has refused to certify election results where a party has misrepresented some material fact, within its special knowledge, so shortly before the election that the other party or parties do not have time to correct it, and the employees are not in a position to know the truth of the fact asserted.
Hollywood Ceramics Co.,
It is possible to construe the Board’s decision to uphold the election in the present case as an interpretation of what kinds of misstatements would offend the general Hollywood Ceramics standard — in other words, a refinement of the general standard. Because the determination of disruption of laboratory conditions is so fact-dependent, see General Knit of California, Inc.,
[i]t is doubtful whether any generalized standard could be framed which would have more than marginal utility. The Board thus has reason to proceed with caution, developing its standards in a case-by-case manner with attention to the specific character of the buyers’ authority and duties in each company. The Board’s judgment that adjudication best serves this purpose is entitled to great weight.
See also NLRB v. J. Weingarten, Inc.,
Even if we view the Board’s decision as pure adjudication, with no element of rule-making, however, the majority’s analysis is faulty, for it ignores past refinements and interpretations of the Hollywood Ceramics rule. It is against that body of rules, and not the bare statement quoted above, that we must measure the Board’s decision.
From the time it formulated its material misrepresentation rule the Board emphasized that it would exercise its power to invalidate elections sparingly. In Hollywood Ceramics itself, the Board emphasized that elections “should not be lightly set aside,” partly because of its respect for the integrity of the government-conducted, secret-ballot process, partly because it viewed repeated elections as harmful to labor relations, and partly because “absolute precision of statement and complete honesty are not always attainable in an election campaign, nor are they expected by the employees.”
We believe that an election should be set aside only where there has been a misrepresentation or other similar campaign trickery, which involves a substantial departure from the truth, at a time which prevents the other party or parties from making an effective reply, so that the misrepresentation ... may reasonably be expected to have a significant impact on the election. However, the mere fact that a message is inartistically or vaguely worded and subject to different interpretations will not suffice to establish such misrepresentation as would lead us to set the election aside. Such ambiguities, like extravagant promises, derogatory statements about the other party, and minor distortions of some facts, frequently occur in communication between persons. But even where a misrepresentation is shown to have been substantial, the Board may still refuse to set aside the election if it finds upon consideration of all the circumstances that the statement would not be likely to have had a real impact on the election.
Id. at 224 (footnotes omitted).
In applying Hollywood Ceramics the Board occasionally felt compelled to remind
[W]e ought not be casual or overready to agree either that the secret ballot choice of a majority of the eligible voters, made under closely supervised balloting conditions, be disregarded or that it await finality while we undertake further administrative proceedings, and encourage further litigation. At least we must carefully weigh in the balance whether considerations of protecting the integrity of our elections are, under all of the circumstances, sufficiently significant to warrant a further expenditure of public funds, a further investment of the time of our personnel, and, as here, a delay in the commencement of collective bargaining on behalf of the employees by the agent they have selected....
... We have ..., in entering this difficult area at all, exercised an abundance of administrative caution. In applying that abundance of caution, however, we believe we must again be cautious.
... [0]ur experience has taught us how easy it is for an objecting party in any heated campaign to seize upon some sentence, or some paragraph, in the final propaganda effort by one of the participants and find therein a claimed departure from solid fact or objective truth, and demand that we hold a hearing as to its verity and as to the still more elusive issues of materiality to the voter’s choice and its probable — or possible — impact on that choice.
... [Tjhere must be a reasonably flexible and not too constrained or rigidly controlled area left for administrative expertise in determining, in the best judgment we can muster from our knowledge and experience in the field, and in the exercise of sound administrative discretion, what circumstances justify ... invalidating an election ....
The difficulty of maintaining these limitations on intervention impelled the Board in Shopping Kart to curtail intervention almost completely.
The Shopping Kart majority clearly thought the Hollywood Ceramics rule failed to take ... into account [employees’ ability as mature adults to evaluate campaign rhetoric]. In this, they were in error. Rather, the principles of Hollywood Ceramics clearly recognize employee ability to assess the bulk of campaign propaganda. As can be discerned from the general principle in that decision, ... the area of the Board’s concern involving alleged misrepresentations is truly a circumscribed one.
General Knit,
The Board’s ábstract formulations of its rule left no doubt that its scrutiny would be shallow. Its wavering between never upsetting elections and upsetting them in a limited class of cases, demonstrating its hesitancy to interfere at all, reinforces its assertions that successful Hollywood Ceramics challenges should be rare. The best indication of what the Board actually means by misrepresentations so substantial as to impair the validity of an election, however, is its practice in adjudicating particular cases. In many cases the Board has overruled objections to elections based on erroneous wage comparisons made by unions, employees, or employers, often rejecting the findings of the regional director or trial examiner, as it did in the present case. In National Waterlift Co.,
Nor are these cases aberrations from the Board’s usual practice. See, e.g., National Medical Hospital,
The inaccuracies in National Waterlift and Russell-Newman are similar to those alleged in the present case. As in Russell-Newman, the Board in Mosey,
The company also objects to several other instances of alleged misrepresentations: a statement, first made two weeks before the election, that the employer discharged all but eight pro-union employees following a prior unsuccessful campaign; a statement, made twenty-six days before the election, that the company’s contracts prevented it from ceasing business; a statement, made twenty-six days before the election, that the employer could not reduce wages and benefits if the union won; and a statement, made fifty-one days before the election, that the employer could not close the plant and start any other business anywhere in the country. Apart from any other considerations, these statements do not constitute a basis for invalidating the election under the Hollywood Ceramics rule because, as the regional director noted, Mosey Manufacturing Co., No. 25-RC-6619, at 6, 7 n. 4, the employer had ample time to reply.
I conclude that under the Hollywood Ceramics standard (a standard that has not been challenged as arbitrary, capricious, an abuse of discretion, or contrary to law), the Board would refuse to certify election results only in extraordinary circumstances, and that substantial evidence supports its determination that such circumstances were not present here. The majority concedes that if the Board’s certification was proper under this standard as well as under the
II
The majority argues that we cannot be certain that the Board would apply the Shopping Kart/Midland standard to this case, and the consequently necessary remand (assuming that the result would be different if Hollywood Ceramics criteria were applied) would create such delay that future enforcement of the bargaining order would be inequitable. But the Board has expressed its intention to apply its current rule retroactively, in accordance with its usual practice. Midland, 263 N.L.R.B. No. 24, at 21 n. 24. Courts often enough remind agencies of their duty to follow their own rules that it would be odd for us to assume that the Board might not do so in this case.
Moreover, we have good indications that the Board would not consider this an extraordinary case, calling for an exception to its retroactivity rule. In Rex-Hide, Inc.,
I therefore conclude that the Board would apply Midland to this ease, making certification proper even if the election would have been invalidated under the Hollywood Ceramics test (which I do not concede). It is unnecessary to remand this issue.
III
The majority also argues that remand is necessary because we do not know how the Board would evaluate the company’s non-misrepresentation objections. But it is disingenuous to say that we are uninformed about the Board’s view and that “Mosey has never had judicial review” of this issue, ante at 612, for the Board considered and rejected these objections long ago, see Mosey Manufacturing Co.,
A
The company alleges that two threats tainted the election: first, some employees stated that pro-union employees would be discharged if the union lost; second, a burly, pro-union employee told another employee that if the union won, and there were a strike, and the other employee crossed the picket line, he would kill him. The Board, adopting the finding of the Administrative Law Judge, dismissed the objections because neither statement was attributable to the union, and neither was shown to have been coercive, because the first was a prediction about employer action beyond the union’s control, and the second was not so widely circulated as to create a general atmosphere of fear, and was neither implicitly nor explicitly ratified by the union.
The Board properly dismissed these objections because the statements could not be imputed to the union. Threats or promises by third parties are tolerated to a greater degree than threats or promises by the union or employer, see, e.g., NLRB v. Belcor, Inc.,
Moreover, even if responsibility for the statements that pro-union employees would be discharged if the union lost could be imputed to the union, it was reasonable to consider them noncoercive, because discharge of employees was not within the union’s control, nor, I venture to surmise, within its desires. A statement about future events beyond a party’s control cannot be considered a threat. See NLRB v. Bos-tik Division, USM Corp.,
The company’s objection to the threat of strike violence is weak for the same reason. As the regional director noted, Mosey, No. 25-RC-6619, at 5, an employee threatened with violence for crossing a hypothetical future picket line has an incentive to vote against the union in order to prevent the possibility of a strike; and in any case because the threat was not conditioned on the employee’s vote in the election, the inference that it might have affected the voting is tenuous. For these reasons, the Board’s finding that no coercive atmosphere was created is sound.
B
The company further alleges that the union’s statement that, if it won the election, it could “guarantee ... that [the employees’] Local will get as much, if not more, support as American Motors of Richmond did (they ended up with a first year pay
C
Finally, the company argues that Board agents acted improperly in refusing to reopen the polls, after the ballots had been tallied, to allow two employees, one of whom was absent from work and the other of whom had fallen sick at work, to vote. It is a long-standing Board policy that a majority of votes cast by a representative group of employees, rather than a majority of eligible voters, is sufficient for certification. See RCA Manufacturing Co.,
IV
The fourth premise of the majority opinion is that delay between an election and a request to enforce an order to bargain is a sufficient reason to deny enforcement. This view overlooks the well-established principle that for one year following certification of a union, excluding time spent litigating unfair labor practice charges, there is a nearly irrebuttable presumption of continued majority status. See Brooks v. NLRB,
Moreover, even apart from this rule, I am not convinced by the majority’s assertion that enforcement of the bargaining order is inequitable in this case. The changes in Board policy have not prejudiced the employer: the company has achieved its goal of putting off collective bargaining for five and a 'half years, and its litigation expenses, particularly in light of my conclusion that the election was untainted, have no bearing on its duty to bargain now. The majority’s concerns that enforcement would be inequitable to the employees because of the staleness of the election have been decisively dismissed by the Supreme Court, whose counsel we are bound to follow:
Petitioner contends that whenever an employer is presented with evidence that his employees have deserted their certified union, he may forthwith refuse to bargain. In effect, he seeks to vindicate the rights of his employees to select their bargaining representative. If the employees are dissatisfied with their chosen union, they may submit their own grievance to the Board. If an employer has doubts about his duty to continue bargaining, it is his responsibility to petition the Board for relief, while continuing to bargain in good faith at least until the Board has given some indication that his claim has merit... . The underlying purpose of this statute is industrial peace. To allow employers to rely on employees’ rights in refusing to bargain with the formally designated union is not conducive to that end, it is inimical to it. Congress has devised a formal mode for selec*627 tion and rejection of bargaining agents and has fixed the spacing of elections, with a view of furthering industrial stability and with due regard to administrative prudence.
Brooks,
Finally, even if equity did demand denial of enforcement when delay resulted in the union’s loss of majority status, no such showing has been made here. Once an employer recognizes a union, under the certification-year rule majority status is nearly conclusively presumed; after that period the presumption continues but becomes rebuttable. See NLRB v. Burns International Security Services,
V
I conclude that the Board properly held the election untainted by misrepresentations under any standard; that in any case the Board would now apply a standard under which the majority concedes certification was proper; that the company’s other objections to certification, which this court has the capacity to review now, lack merit; and that firmly established labor principles, unchanged by appeals to equity, require enforcement of the Board’s order. I therefore dissent.
. The timetable was as follows:
April 15, 1977 Union representation petition filed.
June 10, 1977 Election.
June 17, 1977 Investigation of election in response to company objections.
July 20, 1977 Regional Director’s certification of Union.
September 22,1977 Board denial of review.
October 5,1977 Company’s refusal to bargain.
November 15,1977 General Counsel’s issuance of unfair labor practice complaint.
February 13,1978 Board’s order to bargain.
April 25,1978 Board application for enforcement to Seventh Circuit.
March 27,1979 Seventh Circuit’s remand.
See Joint Appendix at 30-31.
A week before the election the company sent the employees a letter titled “CARPENTER ORGANIZER’S PUT UP OR SHUT UP CHECKLIST,” which challenged the employees to ask the union to subscribe to the following pledge, among others:
I guarantee that if the Carpenter’s Union wins the election you will receive a bigger wage increase than you would receive without the Union.
Signed:- Date: -
Carpenter’s Union Representative