U.S. MARINE CORPORATION and Bayliner Marine Corporation,
Petitioners/Cross-Respondents,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent/Cross-Petitioner,
International Union, Allied Industrial Workers of America,
AFL-CIO, et al., Intervening Respondent.
INTERNATIONAL UNION, ALLIED INDUSTRIAL WORKERS OF AMERICA,
AFL-CIO, et al., Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent.
Nos. 89-2051, 89-2140 and 89-2152.
United States Court of Appeals,
Seventh Circuit.
Argued Dec. 5, 1989.
Decided Oct. 18, 1990.
Reheard En Banc June 11, 1991.
Decided Sept. 25, 1991.
Fred G. Groiss, Quarles & Brady, Milwaukee, Wis., James D. Holzhauer (argued), Mayer, Brown & Platt, Chicago, Ill., for petitioners/cross-respondents.
Kenneth R. Loebel (argued), Previant, Goldberg, Uelman, Gratz, Miller & Brueggeman, Milwaukee, Wis., for intervening respondent, petioner.
Steven B. Goldstein, Contempt Litigation Branch, Washington, D.C., Fred G. Groiss, Quarles & Brady, Milwaukee, Wis., Aileen A. Armstrong, Linda J. Dreeben (argued), Appellate Court, Enforcement Litigation, Washington, D.C., Joseph A. Szabo, Director, N.L.R.B., Region 30, Milwaukee, Wis., James D. Holzhauer (argued), Mayer, Brown & Platt, Chicago, Ill., for respondent.
Before BAUER, Chief Judge, and CUMMINGS, WOOD, Jr., CUDAHY, POSNER, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION and KANNE, Circuit Judges.
RIPPLE, Circuit Judge.
U.S. Marine Corporation, Bayliner Marine Corporation, and the International Union, Allied Industrial Workers of America, AFL-CIO, seek review of an order of the National Labor Relations Board (the Board); the Board seeks enforcement of that order. For the following reasons, we deny the petitions for review and enforce the order.
* BACKGROUND
A. The Board's Findings of Fact1
This successorship case involves the rights and responsibilities of U.S. Marine Corporation and its parent company, Bayliner Marine Corporation, as a result of their purchase of Chrysler Marine Corporation. The issues presented on appeal require a plenary statement of the facts. To facilitate the reader's understanding of the factual background of the case, we shall subdivide our presentation of the facts into three headings: (1) the purchase by Bayliner; (2) the hiring process of U.S. Marine; and (3) the post-purchase labor-management relations of U.S. Marine and the Union. However, we also forewarn the reader that, at a later point in the analysis, a strict chronological understanding of events, necessarily sacrificed somewhat by the format described, will be necessary.
1. The purchase by Bayliner
Chrysler Marine Corporation (Chrysler), a subsidiary of the Chrysler Corporation, manufactured marine and industrial engines from 1965 until 1984 at a facility in Hartford, Wisconsin. In 1983, the parent company decided to sell Chrysler and entered into negotiations with Bayliner Marine Corporation (Bayliner) for the sale of the Hartford facility. Chrysler and Bayliner signed a letter of intent, subject to the negotiation of specific terms, on October 20, 1983. In anticipation of the transaction, the stockholders and directors of Bayliner organized U.S. Marine Corporation on December 5, 1983 as a vehicle to purchase Chrysler.2 James W. Hoag, Bayliner's vice-president of administration, was assigned to be general manager and chief operations officer of the Hartford plant once the purchase was completed. He also was responsible for hiring new employees to staff the plant.
During the time that Chrysler owned the Hartford facility, the International Union, Allied Industrial Workers of America, AFL-CIO, and Local 879 (the Union) represented Chrysler's production and maintenance employees.3 The fate of these employees was a significant issue throughout the course of negotiations between Chrysler and U.S. Marine. Chrysler repeatedly sought assurances that U.S. Marine would hire Chrysler's employees. However, U.S. Marine made it clear to the Union, Chrysler, and Chrysler's employees that it (1) would hire only the most qualified applicants, irrespective of whether they formerly worked for Chrysler, although former Chrysler workers were encouraged to apply, (2) anticipated hiring at least eighty-five per cent of the former Chrysler employees, (3) would not recognize the Union, and (4) planned to hire its employees under its own wage plan and working conditions and therefore would not observe the terms and conditions of employment in effect under Chrysler. James Hoag specifically advised several Union officials at a meeting on December 13, 1983 that he "had no intention of recognizing the union," "wanted no part of the contract [between Chrysler and the Union]," and "was too busy to sit down and meet with the union." Tr. at 691, 692.
The Union reacted to this information by seeking to enjoin the sale of Chrysler to U.S. Marine. The Union sought the injunction on the ground that the sale would violate the Union's collective bargaining agreement, which required Chrysler to give the Union six months notice of the closing of the Hartford facility and negotiate a severance pay plan. See Local 879, Allied Indus. Workers v. Chrysler Marine Corp.,
2. The hiring process of U.S. Marine
From Monday, January 16 through Friday, January 20, the company interviewed some 500 applicants and hired new employees. On January 20, after the first week of hiring was completed, the company's accounting department projected that U.S. Marine would require 396 employees actually on the job by June. This figure was based on information supplied by the company's manufacturing and marketing departments and did not reflect anticipated absentee rates. According to John Lombardo, U.S. Marine's human resources manager, U.S. Marine wanted to reopen the plant as quickly as possible. He further testified that in order to do so, the company required a skilled labor force composed of employees who had experience in the particular operations. Consequently, on Monday, January 23, U.S. Marine reopened the plant with a staff of 219 workers, all of whom were former Chrysler employees.
U.S. Marine continued to hire employees throughout the month of January. By January 25, the company had hired a total of 231 workers, 222 of whom were former Chrysler employees. Between January 25 and January 30, thirty more employees were hired, only one of whom had worked for Chrysler. Thus, on January 30, 1984, the last day a former Chrysler employee was hired, the U.S. Marine work force was composed of 261 production and maintenance employees, 223 of whom had worked previously for Chrysler.
Nearly all of the 262 former Chrysler workers had applied with U.S. Marine; of those who applied, U.S. Marine hired all but thirty-four.4 There was a great deal of testimony concerning the skill level and versatility of the thirty-four former Chrysler employees not hired by U.S. Marine.5 All of these workers had at least ten years seniority with Chrysler, but they never were informed why they had not been hired. After January 30, 1984, U.S. Marine did not hire any of the remaining Chrysler applicants, although its work force increased to as many as 323 employees. In sum, from January 23 to August 31, 1984, U.S. Marine's total employment ranged from 219 to 323 production and maintenance employees. During that time period, the number of former Chrysler employees ranged from 218 to 223.
3. Post-purchase labor-management relations of U.S. Marine and the Union
After it began operating the plant, U.S. Marine refused to discuss grievances with Union representatives during company time. The company also removed Union bulletin boards from the plant. At the same time, the company established a "Safety and Progress Committee" composed of senior management employees and representatives from each work area. The Committee was designed as an open forum where employees could raise complaints and discuss all problems or areas in need of change; no subject was off-limits for discussion. The Committee met during work hours, and employee participants were paid for their time.
On January 25, 1984, two days after the plant began operations under new management, at a time when 222 of the 231 U.S. Marine employees were former Chrysler workers, the Union requested recognition. The Union also asked that U.S. Marine furnish a list of names, addresses, job titles, and wage rates of all U.S. Marine employees and copies of all written manuals and handbooks describing the benefits then provided by U.S. Marine. The company, which was still involved in the hiring process, did not give the Union an immediate response.
On or shortly after January 31, 1984, after the Union had requested recognition and after the last Chrysler employee was hired, Mr. Hoag personally modified the accounting department's manpower projection figure from 396 to 460 workers required by June. This modification allegedly was based on an increased production schedule and the absenteeism rate experienced by Chrysler in 1983. Before determining the manpower projection, however, Mr. Hoag increased the company's estimated production schedule by forty engines for May of 1984 and ninety engines for June. He was unable to explain the basis of this increase. Moreover, the absentee rate used by Mr. Hoag reflected the fact that Chrysler employees would have been entitled to lengthy paid vacations; in 1984, U.S. Marine employees would not have been entitled to any paid vacation.6
When the company had not yet responded to the Union's recognition request on February 2, 1984, the Union filed an unfair labor practice charge alleging that U.S. Marine unlawfully had refused to bargain. The Board subsequently sought a temporary injunction pursuant to section 10(j) of the National Labor Relations Act (the Act), 29 U.S.C. § 160(j). U.S. Marine defended its refusal to recognize and bargain with the Union on the grounds that it did not expect to have a full complement of employees until June 1984, that the full complement would consist of 460 employees, and that there was no legal obligation to recognize the Union because less than half of those 460 were expected to be former Chrysler employees. On May 10, 1984, the district court granted the Board's petition. The court ordered U.S. Marine to recognize and bargain with the Union and to supply the information that the Union had requested on January 25.
Following issuance of the temporary injunction, U.S. Marine continued to hold Safety and Progress Committee meetings and to respond to employee requests stemming from those sessions. Based on this conduct, U.S. Marine was found in contempt of the injunction. See Szabo v. U.S. Marine Corp.,
B. Administrative Proceedings
1. The Administrative Law Judge's conclusions
Based on these facts, the Administrative Law Judge (ALJ) determined that Bayliner and U.S. Marine Corporation constitute a single employer and that U.S. Marine, as the successor to Chrysler, had engaged in numerous unfair labor practices. Specifically, the ALJ concluded that the company violated section 8(a)(5) and (1) of the Act (29 U.S.C. § 158(a)(5) and (1)) by refusing to recognize the Union, refusing to furnish the Union with certain information, bargaining in bad faith with the Union, unilaterally implementing changes in terms and conditions of employment without first bargaining in good faith with the Union, bargaining individually with employees, and establishing and bargaining with the Safety and Progress Committee.
With regard to the charge that U.S. Marine had violated section 8(a)(3) and (1) of the Act (29 U.S.C. § 158(a)(3) and (1)) by refusing to hire thirty-four of the former Chrysler workers, the ALJ determined that these applicants had not been subjected to discrimination. In the ALJ's view, even considering the company's established antiunion animus and the fact that no former Chrysler employees were hired after January 30, 1984, nothing in the evidence indicated why those applicants had not been hired. The ALJ reasoned that the demonstrated unfair labor practices could support a section 8(a)(3) violation if there was a "junction point" between U.S. Marine's hostility to the Union and the company's hiring process. The ALJ was unable to find such an intersection and therefore found that the evidence did not support the unfair labor practice charge.
The ALJ apparently reasoned that the section 8(a)(3) charge could be supported only by a finding that Mr. Hoag accepted the 460 manpower figure as a real goal; if Mr. Hoag so believed, he then would be motivated to stop hiring former Chrysler employees so that the U.S. Marine work force consisted of a non-union majority. However, the ALJ already had concluded that Mr. Hoag did not truly believe the 460 manpower projection figure and that, consequently, Mr. Hoag would have no incentive for refusing to hire additional Chrysler employees. Therefore, in light of what the ALJ believed was an "inherent conflict," and, in the absence of substantive evidence of the company's motivation, the ALJ declined to hold that U.S. Marine's hiring decisions were motivated by antiunion animus or the desire to avoid a duty to bargain.
Having found that U.S. Marine violated section 8(a)(5) and (1), as set forth above, the ALJ recommended that the company be ordered to cease and desist from unilaterally changing the terms and conditions of employment without first bargaining with the Union, bargaining individually with employees, and bargaining or meeting with the Safety and Progress Committee. The ALJ also recommended that the company be ordered to recognize and bargain with the Union and furnish the Union with certain information. Finally, the ALJ's recommended order included a visitorial clause.7
2. The Board's conclusions
The Board unanimously affirmed the ALJ's conclusion that U.S. Marine committed the enumerated section 8(a)(5) violations. The Board also upheld the ALJ's determination that James Hoag falsely inflated U.S. Marine's employee projections. However, contrary to the ALJ's finding, the Board concluded that U.S. Marine violated section 8(a)(3) of the Act by failing to hire thirty-four former Chrysler employees. The ALJ had been unable to find a nexus between the company's antiunion animus and its failure to hire these applicants. The Board, however, found that the requisite nexus lay in the fact that "[t]he end sought to be achieved by the false 'full complement' figure," evasion of a bargaining obligation as Chrysler's successor, "would be frustrated if the former Chrysler employees constituted more than half of that figure." Board Decision & Order (D & O) at 7-8. Once the manpower projection falsely was set at 460,
it became imperative that [U.S. Marine] hire fewer than 231 former Chrysler employees, or the 460 figure would become meaningless as a defense to the Union's recognitional claim. Thus, the sham inflation of the full-complement projection and the decision to stop rehiring former Chrysler employees once their number had reached 223 are complementary aspects of the same scheme sought to be carried out by U.S. Marine.
Id. at 5-6. The Board noted that the ALJ's failure to find a section 8(a)(3) violation was based on the ALJ's mistaken assumption that Mr. Hoag would "proffer the 460 figure as a defense to recognition, and then not take this figure into account in making his hiring decision." Id. at 8. Accordingly, the Board concluded that U.S. Marine refused to hire the Chrysler applicants in an unlawful attempt to avoid a bargaining obligation.
With regard to the remedy, the Board accepted the ALJ's recommendations with the exception of the visitorial clause. The Board's order did not include such a clause. It acknowledged the ALJ's recommendation but summarily rejected it, stating, "[w]e find no need for such a remedial provision here. See Cherokee Marine Terminal,
The most significant difference between the Board's order and the ALJ's recommended order was based on the Board's conclusion that U.S. Marine unlawfully refused to hire thirty-four former Chrysler employees. To remedy that conduct, the Board modified the ALJ's decision and ordered the company to offer employment, with back pay and benefits, to those thirty-four applicants. Over one dissent, the Board also directed U.S. Marine to reinstate the terms and conditions of employment that were in effect under Chrysler's management of the Hartford facility.8
II
ANALYSIS
A. Standard of Review
We have jurisdiction to hear this appeal pursuant to 29 U.S.C. § 160(e), (f). Our standard of review is governed by statute and set forth in 29 U.S.C. § 160(e). Specifically,
[o]n review, the Board's factual findings are 'conclusive' if they are supported by 'substantial evidence on the record as a whole.' Section 10(e) of the Act, 29 U.S.C. § 160(e). The Board's application of the law to particular facts is also reviewed under the substantial evidence standard, and the Board's reasonable inferences may not be displaced on review even though the court might justifiably have reached a different conclusion had it considered the matter de novo.
Indianapolis Power & Light Co. v. NLRB,
"Moreover, we must 'recognize the Board's special function of applying the provisions of the Act to the complexities of industrial life.' " Id. (quoting NLRB v. Erie Resistor Corp.,
B. Issues Presented
As a threshold matter, we also state what is ... and what is not ... contested in this appeal. U.S. Marine does not appeal the Board's determinations that
(1) U.S. Marine Corporation and Bayliner constitute a single employer,
(2) U.S. Marine is a successor employer to Chrysler,
(3) U.S. Marine violated section 8(a)(5) and (1) of the Act by
(a) refusing to recognize and furnish certain information to the Union,
(b) failing to bargain in good faith with the Union,
(c) unilaterally implementing changes in terms and conditions of employment,
(d) bargaining individually with employees, and
(e) establishing and bargaining with an employer-dominated labor organization (the Safety and Progress Committee).
Accordingly, the Board's order with respect to these issues is enforced. See Montgomery Ward & Co. v. NLRB,
Before this court, the company challenges the Board's conclusion that U.S. Marine violated the Act by refusing discriminatorily to hire thirty-four former Chrysler employees. The company also challenges the Board's order that U.S. Marine remedy this violation by offering to hire the thirty-four former Chrysler employees with back pay. Finally, the company contests the Board's order that U.S. Marine reinstitute the terms and conditions of employment that were in effect under Chrysler. We examine whether the Board's conclusions on these issues are supported by substantial evidence. We also consider the Union's claims concerning the appropriateness of the Board's remedial order.
C. Hiring of Former Chrysler Employees
We begin by reviewing the Board's determination that U.S. Marine violated section 8(a)(3) and (1) of the Act by refusing to hire thirty-four former Chrysler employees. In order to prove a violation of the Act, the Board's General Counsel must establish, by a preponderance of the evidence, that the alleged unfair labor practice was motivated by antiunion sentiment. NLRB v. Transportation Management Corp.,
The basic applicable substantive principles of federal labor law are beyond dispute. When a new employer acquires a business, it is free, as a general rule, to determine the initial terms and conditions of employment. NLRB v. Burns Int'l Sec. Servs.,
The Board determined that U.S. Marine refused to hire thirty-four of Chrysler's former employees in order to avoid having to bargain with the Union. Accordingly, the Board concluded that the company had violated section 8(a)(3) of the Act. In reaching this conclusion, the Board employed the analytical pattern set forth in Dasal Caring Centers,
it must be established that there is substantial evidence of union animus; lack of a convincing rationale for refusal to hire the predecessor's employees; inconsistent hiring practices or overt acts or conduct evidencing a discriminatory motive; as well as a reasonable inference from the evidence that Respondent conducted its staffing in a manner precluding the predecessor's employees from being hired as a majority of Respondent's overall work force to avoid the Board's successorship doctrine.
Id. In this appeal, it is our duty, as we have noted already, not to determine this matter de novo but to decide whether the Board's conclusion is supported by substantial evidence on the record taken as a whole. See supra pp. 1313-14. In reviewing the Board's conclusion, we shall follow the analytical pattern developed in Dasal Caring Centers--not as a rigid formula but as a guide to our evaluation of the evidence relied upon by the Board.
1. Substantial evidence of antiunion animus
We need to devote little space to this matter. The record amply demonstrates that, from the very beginning of its negotiations with Chrysler for the sale of the business, Bayliner made it clear that it would not deal with the Union. Indeed, the best evidence of antiunion animus on the part of U.S. Marine can be found in the violations of the Act not contested on this appeal. See supra p. 1314.
2. Lack of convincing rationale for refusal to hire the predecessor's employees
The record establishes, as the ALJ determined and the Board upheld, the absence of any legitimate reason for U.S. Marine's refusal to hire thirty-four former Chrysler employees. Based on the testimony, the ALJ determined that the applicants who were turned down were good employees, were versatile and skilled in various jobs at the plant, had worked at the plant a minimum of ten years, and had work-related characteristics comparable to the 223 former Chrysler employees who were hired. Nevertheless, they were rejected while more than one hundred other applicants were hired; U.S. Marine was unable to explain these rejections to either the applicants (none was told why he had been passed over) or to the Board. Indeed, " 'there is no substantive evidence of why one person was hired and one was not hired.' " D & O at 7 (quoting Administrative Law Judge's Decision (ALJD) at 22).11
3. Inconsistent hiring practices or overt acts or conduct evidencing a discriminatory motive
There is substantial evidence, both direct and circumstantial, from which the Board could infer that thirty-four of the applicants were not hired because they were union members who formerly had worked for Chrysler. As a threshold matter, we note that central to this conclusion is the Board's determination that Mr. Hoag falsely inflated the projected work force figures in order to avoid the obligation to negotiate with the Union. The ALJ pointedly noted that the accuracy of the manpower requirement figures relied on by the company to defend its conduct turns
entirely upon Hoag's personal credibility. Hoag is not an engineer, nor a production manager, but a lawyer, involved at Bayliner with human resources and administration, not marketing, sales, or production. As noted, there is no corroborating evidence from Bayliner, or U.S. Marine, or independent sources, of why Hoag decided that 40 additional engines would be built in May of 1984 and 90 more in June.... Further, Hoag's projections on absentee rates ... were manifestly inaccurate. [Based on Hoag's selective memory and inconsistent explanations,] I do not credit Hoag's explanations of his motives in revising the U.S. Marine estimates of production and manpower needs....
ALJD at 17-18 (emphasis supplied). Like the Board, we shall not disturb the ALJ's decision that Mr. Hoag's testimony lacked credibility. See Roadmaster Corp. v. NLRB,
4. Intent to avoid the successorship doctrine
The last part of the Dasal analysis--necessarily cumulative of the first three inquiries--focuses on whether the Board reasonably could infer that U.S. Marine conducted its hiring process to preclude Chrysler's employees from being hired as a majority of the overall work force in order to avoid a bargaining obligation as Chrysler's successor. U.S. Marine maintains that "no unlawful purpose would have been served by not hiring 34 of the former Chrysler employees." Appellants' Br. at 19. To the contrary, once the manpower projection falsely was set at 460,
it became imperative that [U.S. Marine] hire fewer than 231 former Chrysler employees, or the 460 figure would become meaningless as a defense to the Union's recognitional claim. Thus, the sham inflation of the full-complement projection and the decision to stop rehiring former Chrysler employees once their number had reached 223 are complementary aspects of the same scheme sought to be carried out by U.S. Marine.
D & O at 5-6 (emphasis supplied). Accordingly, the unlawful purpose of avoiding a bargaining obligation could have been served only by not hiring more of the Chrysler applicants: to maintain a colorable defense against the Union's request for recognition, U.S. Marine had to keep the number of Chrysler workers at less than fifty per cent of its anticipated work force. See Fall River Dyeing,
U.S. Marine contends that the Board erred in finding a section 8(a)(3) violation. The company argues that it is "critical" that the manpower projections were not altered by Mr. Hoag until after the thirty-four former Chrysler employees' applications had been rejected. Appellants' Br. at 19-20. However, Mr. Hoag and Joy Mueller, U.S. Marine's employment supervisor, testified that the thirty-four applicants were not in fact rejected but remained under consideration throughout the hiring process.15 More fundamentally, the company's reliance on this point is misplaced because the sequence of Mr. Hoag's manipulation of the manpower figure and the decision to stop hiring former Chrysler employees is largely irrelevant. There is substantial evidence that U.S. Marine's desire to avoid a bargaining obligation predated its purchase of the plant. If the employee projections had been made earlier in the hiring process, the goal of keeping former Chrysler workers at less than half of the total U.S. Marine work force still could have been reached by refusing employment to a greater number of the Chrysler applicants. Consequently, the fact that Mr. Hoag inflated the figure after he knew that the rather disorganized hiring process had resulted in 223 former Chrysler workers having been hired--and therefore knew that the employee projection had to be at least 447 (twice 223 plus one)--is not controlling. However, it is chronologically significant that Mr. Hoag altered the manpower projections after the Union had requested recognition.
Although the ALJ was unable to find consistent theories to support both U.S. Marine's refusal to recognize the Union and the company's alleged discriminatory hiring practices, the Board reasonably concluded that U.S. Marine's unlawful motivation led to the company's refusal to hire some of the Chrysler applicants. Based on its conclusion that Mr. Hoag falsely inflated the work force requirements and on the other record evidence supporting the conclusion that the purpose of this manipulation was to allow U.S. Marine to avoid a bargaining obligation as Chrysler's successor, the Board's inference--that the thirty-four former Chrysler applicants were not hired in order to keep at less than fifty per cent the number of former Chrysler workers--was both reasonable and supported by substantial evidence. Our task is to determine whether the Board's interpretation is supported by substantial evidence. Universal Camera Corp. v. NLRB,
D. The Board's Remedial Order to Restore Terms and Conditions of Earlier Contract17
As we have already noted, but repeat for emphasis, Congress has charged the Board, not the courts, with "the task of devising remedies to effectuate the policies of the Act." NLRB v. Seven-Up Bottling Co.,
Based on U.S. Marine's failure to bargain as a successor and its unlawful refusal to hire former Chrysler workers, the Board imposed a "make whole" remedy and ordered the company to reinstate the terms and conditions of employment in effect under Chrysler. In challenging this status quo ante remedy, U.S. Marine contends that the Board exceeded its authority and claims that this portion of the order is improperly punitive. For the following reasons, we cannot accept the company's claim.
Under the mandate of NLRB v. Burns International Security Services, Inc.,
The goal of a remedial order is "to create 'a restoration of the situation, as nearly as possible, to that which would have obtained' but for the unfair labor practices." NLRB v. Keystone Steel & Wire,
In challenging the Board's imposition of the status quo ante remedy, U.S. Marine focuses on the Supreme Court's statement in Burns that such consultation is appropriate when "it is perfectly clear that the new employer plans to retain all of the employees in the unit."
Next, U.S. Marine relies on the Board's decision in Spruce Up Corp.,
[w]hen an employer who has not yet commenced operations announces new terms prior to or simultaneously with his invitation to the previous work force to accept employment under those terms, we do not think it can fairly be said that the new employer "plans to retain all of the employees in the unit," as that phrase was intended by the Supreme Court.
Id. at 195. Consequently, concluded the Board, the successor's duty to consult the union before implementing changes in the terms of employment should apply only when the successor has failed to announce its intent to hire employees under new working conditions or has misled the predecessor's employees into believing that they would be retained under the same conditions. Id.
We believe that the company's reliance on Spruce Up and its progeny is misplaced. In Spruce Up, there was a legitimate ambiguity as to whether the new employer would in fact be able to hire the predecessor's employees because the new terms were substantially different from those of the predecessor. The employer did not refuse unlawfully to hire its predecessor's employees in order to avoid having to recognize and bargain with the union. By contrast, U.S. Marine, by its illegal activity, has created any ambiguity as to whether all or nearly all Chrysler employees would have accepted positions. That ambiguity must be resolved against it.22
U.S. Marine correctly argues that the Board may not impose punitive remedies. See NLRB v. Strong,
"[a] remedy that allowed to stand the reduced terms and conditions of employment that the Respondent imposed unilaterally ... would quite possibly leave victims uncompensated and it would confer Burns rights on an employer that has not conducted itself like a lawful Burns successor because it has unlawfully blocked the process by which the obligations and rights of such a successor are incurred."
D & O at 11 (quoting State Distrib. Co.,
"Restoration of the status quo ante following an unfair labor practice is prima facie appropriate; it is for the [employer] to demonstrate that it is not appropriate." North Carolina Coastal Motor Lines, Inc.,
Finally, U.S. Marine claims that imposition of the status quo ante remedy offends due process because the unfair labor practice charge did not allege that the company had violated the Act by setting the initial terms of employment in January 1984 without first consulting with the Union. First, the charge specifically alleged that the company had violated section 8(a)(3) and (5) of the Act by refusing to hire thirty-four former Chrysler employees in order to avoid a bargaining obligation and by refusing to bargain with the Union. The remedy ordered in this case is based on the established principles applicable to successors who discriminate in order to avoid a bargaining obligation; such employers lose the right to set initial terms and conditions of employment and may be ordered to rescind any changes in those terms and compensate employees for losses in order to put them in the position they would have been but for the employer's unlawful conduct. E.g., Shortway Suburban Lines,
Moreover, strictly remedial matters need not be specifically alleged in the unfair labor practice complaint. North Carolina Coastal Motor Lines,
In sum, we conclude that, had U.S. Marine not engaged in unlawful conduct, it would have been obligated to consult with the Union before setting the initial terms and conditions of employment and would have been under a duty to recognize and bargain with the Union in good faith. Instead, the company imposed its own terms and bargained in bad faith. Ordering U.S. Marine to reinstitute the terms of employment in effect under Chrysler restores, " 'as nearly as possible,' " the environment in which U.S. Marine should have bargained. Keystone Steel & Wire,
E. The Union's Appeal
The Union challenges the Board's remedial order in three respects. First, the Union contends that the Board's refusal to include a visitorial clause constitutes an abuse of the Board's discretion. Second, the Union claims that the Board exceeded the bounds of its discretion in failing to direct U.S. Marine to reimburse the Union for its litigation expenses. Finally, the Union asserts that the Board's failure to refer this case to the Justice Department constitutes legal error.
1. Visitorial clause
The Union claims that the Board abused its discretion by failing to include the visitorial clause recommended by the ALJ. More specifically, the Union challenges the Board's mere citation to Cherokee Marine Terminal, 287 N.L.R.B. No. 53, 128 L.R.R.M. (BNA) 1051 (1988), and summary rejection of the ALJ's recommendation. In Cherokee Marine, the Board declined the General Counsel's invitation to include regularly a "model" visitorial clause in its remedial orders. Id. at 1052. The Board found that inclusion of the clause "would not further the Board's remedial goals more effectively than enforcement mechanisms already available." Id. Moreover, the Board was "especially troubled by practical concerns ... and by the potential for abuse inherent in [the visitorial clause's] lack of limits, specificity, and procedural safeguards." Id. at 1053. Of particular concern was the fact that, as in this case, the recommended clause set no time limits on the Board's access to the company's records and statements. Id.; see supra note 7. Based on these and other concerns, the Board concluded that
broad visitatorial rights ... will remain an extraordinary remedy to be used only when warranted by the facts of a particular case.
....
... Therefore, we will continue to grant visitatorial rights, on a case-by-case basis, when the equities demonstrate a likelihood that a respondent will fail to cooperate or otherwise attempt to evade compliance.
In this case, the Board adopted the ALJ's factual conclusions regarding the employer's conduct, but specifically found, in light of Cherokee Marine, that a visitorial clause was not warranted. The court in Teamsters Local Union No. 171 v. NLRB,
2. Litigation expenses
Before the Board, the Union took exception to the ALJ's failure to award legal costs, attorney fees, and the costs incurred by the Union in attending bargaining sessions. The Board subsequently ordered U.S. Marine to reimburse employee members of the Union's negotiating committee for wages lost while attending negotiating sessions, but did not address the Union's request for litigation costs. The Union argues that the Board's failure to address this issue and to order U.S. Marine to reimburse the Union for such costs constitutes an abuse of the Board's discretion. Accordingly, the Union requests that the case be remanded to the Board.30
The Board first ordered an employer to reimburse litigation costs and expenses in Tiidee Products, Inc., because the employer had engaged in "patently frivolous" litigation.
The Board refrains from assessing litigation costs " 'where the defenses raised by [the employer] are "debatable" rather than "frivolous." ' " Workroom for Designers, Inc., 274 N.L.R.B. No. 115, 119 L.R.R.M. (BNA) 1067, 1071 (1985) (quoting Heck's, Inc.,
The Supreme Court has stated that an appellate court may not enlarge the Board's order, but must remand the case when the court "concludes that an agency invested with broad discretion to fashion remedies has apparently abused that discretion by omitting a remedy justified in the court's view by the factual circumstances." NLRB v. Food Store Employees Union,
3. Referral to the Justice Department
The Union's final claim is without merit. The Union asserts that the Board erred in not referring this case to the Justice Department pursuant to 18 U.S.C. § 1001, which prohibits the giving of knowingly false or fraudulent statements in a matter within the jurisdiction of a governmental agency.33 The basis of the Union's claim is the Board's conclusion that James Hoag falsely inflated the anticipated employment figures to deceive the Board and the courts. The ALJ considered the Union's request, but determined that the interests of justice would not be served by drawing Mr. Hoag's conduct to the attention of the Justice Department. The Board did not specifically address this issue in its Decision and Order.
We have found no case requiring the Board to refer cases to the Justice Department. Certainly, the Board need not include such a referral in its order disposing of an unfair labor practice.
Conclusion
For the foregoing reasons, we deny U.S. Marine's and the Union's petitions for review and grant enforcement of the Board's order.
PETITIONS FOR REVIEW DENIED; CROSS-PETITION FOR ENFORCEMENT GRANTED.
EASTERBROOK, Circuit Judge, with whom POSNER, COFFEY, MANION and KANNE, Circuit Judges, join, concurring in part and dissenting in part.
Substantial evidence supports the Board's conclusion that U.S. Marine did what it thought expedient to evade its obligation to bargain collectively with its workers. A remedy is in order.
Again, with emphasis: a remedy is in order. Unlike other agencies that may impose fines and penalties to deter misconduct, the Labor Board is confined to make-whole relief. It may put the workers in the position they would have occupied had there been no violation, and it may restrain future violations. Sure-Tan, Inc. v. NLRB,
Perhaps the agency should have the power to penalize, but it does not. What the Board characterizes as a "forfeiture" of the successor employer's privilege to set its own terms and conditions of employment is a penalty by another name--and not a much different name at that. I therefore disagree with Part II.D of the court's opinion, which requires U.S. Marine to apply to its entire workforce in 1991 the terms and conditions that Chrysler was using when it closed in 1983, and to provide back pay based on these 1983 terms. I join the remainder of the opinion.
Step one in resolving the question whether the Board's order is a remedy is determining what would have happened if U.S. Marine had respected its obligations under the law. Perhaps U.S. Marine was obliged to afford its workers the benefit of the Chrysler contract, on the theory that when a successor is likely to hire most of the predecessor's workers, it must use the predecessor's terms until the union consents to the change or the parties reach impasse after lengthy good-faith bargaining. Cf. Litton Financial Printing v. NLRB, --- U.S. ----,
A bona fide sale of the business enables the successor to start with its own terms. Fall River Dyeing & Finishing Corp. v. NLRB,
The Board implies that when the new employer wants to change the work rules but is willing to offer high wages, it can't do so (because too many of the old employees will apply), while if the work rules are OK and the new employer wants to drop the wages, it may do this because it will believe that it has made the job unattractive to the old workers. Neither labor law nor the economics of restoring failing businesses to health supports or allows such a distinction--especially not when the only way to know whether the predecessor's workers are likely to transfer their loyalties is to see whether they do.
The Second, Fourth, Ninth, and District of Columbia Circuits have held that successors may set their own terms and conditions whether or not the firm expects its predecessor's employees to cross over en masse. Saks & Co. v. NLRB,
Elsewhere in Burns the Court wrote: "It does not follow ... from [the successor's] duty to bargain that it was bound to observe the substantive terms of the collective-bargaining agreement the union had negotiated with [the predecessor] and to which [the successor] in no way agreed."
A conclusion that the pertinent obligation is to consult with the union sets up the critical question: how can it be remedial to require the successor to use the old terms? My colleagues observe that U.S. Marine's "unlawful conduct created ... uncertainty concerning whether substantially all of the former Chrysler employees would have been hired."
If, as four other courts of appeals hold, U.S. Marine was entitled to implement new terms when it took over, no matter how many of Chrysler's workers it expected to hire, then these terms establish the benchmark that the Board is entitled to restore. Had U.S. Marine followed the NLRA to a T, all would have labored on U.S. Marine's terms, not Chrysler's. Subsequent unfair labor practices were designed only to avert the need to bargain with the union. How could it be said that unfair labor practices designed to stymie bargaining require the successor to use particular terms? The Board's rationale is:
The Love's Barbeque remedy that we order here does not require a specific complaint allegation that the Respondents made unlawful unilateral changes when they began their operations. Nor must this remedy rest on a separate finding that the Respondents committed a separate unfair labor practice by unilaterally changing employment terms. The illegality of such changes is subsumed in the broader 8(a)(5) and (3) allegations and violations involved in this case. As noted above, an employer--like the Respondents--that unlawfully discriminates in its hiring in order to evade its obligations as a successor does not have the Burns right to set initial terms of employment without first consulting the Union. The Respondents forfeited any right they may have had as a successor to impose initial terms when they embarked on their deliberate scheme to avoid bargaining with the Union by their discriminatory hiring practices.
293 N.L.R.B. No. 81 at 10. Whatever else one might say about this passage, it fails to explain--fails to attempt to explain--why the "Love's Barbeque remedy" is a remedy rather than a penalty. The telling term "forfeited" gives away the game. (A "Love's Barbeque remedy", after Love's Barbeque Restaurant,
What are the "obligations as a successor" that U.S. Marine "evade[d]"? Much of the Board's discussion preceding the passage I have quoted assumes that U.S. Marine had to start off with Chrysler's terms if it expected most of Chrysler's employees to want to work for it, using these terms until the union agreed to others or good faith bargaining ended in impasse. Such an obligation would make the Board's order a remedy (for the union has never agreed to changes), but there is no such obligation.
One genuine obligation is to act without discrimination in evaluating those of the predecessor's employees who offer to work. The Board found that U.S. Marine discriminated against 34 of the 257 applicants. The remedy for this sin is to hire the 34; it is not remedial to augment the offer to the other workers or to give these 34 terms better than they would have had if U.S. Marine had hired them in 1984. Had U.S. Marine hired these 34 (rather, had it evaluated their applications without discrimination), the terms afforded all workers still would have been those U.S. Marine set, not those Chrysler set.
The second "obligation[ ] as a successor" that U.S. Marine evaded is to bargain once it expects a majority of its workers to come from Chrysler's employees. See Fall River,
Counsel for the Board offered another rationale: if U.S. Marine had known all along that it would be required to bargain with the union, it might not have taken over the plant. Had U.S. Marine kept out of the picture, the workers would have retained the benefits of their collective bargaining agreement with Chrysler. Counsel suggested alternatively that U.S. Marine might have adopted Chrysler's terms to hold down friction with the union. Now the Board said no such things, so counsel's rationalization presents a Chenery problem. Let that pass. No such findings could be sustained. If U.S. Marine (or some equivalent buyer) had not appeared, Chrysler would have closed the plant; the workers would have received unemployment compensation, not the wages and terms of the Chrysler contract. U.S. Marine was willing to come in only if it could make the changes it believed were essential to turn this plant around.
Our court endorses none of the Board's approaches (which makes my colleagues' refrain about deference to the Board puzzling, see Sure-Tan,
Labor law commands us to patrol the border between remedy and penalty. Perhaps that indistinct line is not worth drawing. Lack of authority to penalize, and thus to deter, means that there will be too many violations. Agencies, sensing the need to pack a wallop, strain against the limits of their powers and create de facto penalties. Needing to make a penalty look like a remedy, the Board prescribes back pay and restoration of terms--in other circumstances remedial, but here exceeding the sanction that would be appropriate if the Board had the power to impose explicit fines. Chrysler's workers received generous severance packages on the premise that U.S. Marine was not a mere continuation of the old business. Allied Industrial Workers Local 879 v. Chrysler Marine Corp.,
Following a "careful[ ] examin[ation of] the record," the Board adopted the Administrative Law Judge's (ALJ's) findings of fact and credibility determinations. Board Decision and Order (D & O) at 1 n. 1
Bayliner is owned by J. Orin Edson (chairman), Vinton H. Sommerville (president), David Livingston (vice-president), and Donald Saunders (secretary-treasurer). U.S. Marine Corporation is also owned by J. Orin Edson (president), Vinton H. Sommerville (treasurer), David Livingston (vice-president), and Donald Saunders (secretary). Unless the context requires otherwise, Bayliner and U.S. Marine Corporation will be referred to collectively as U.S. Marine
The most recent collective bargaining agreement between the Union and Chrysler was in effect from July 1, 1983 to June 30, 1984
Of the 262 former Chrysler employees, 258 applied for jobs with U.S. Marine. Of those 258 applicants, 223 were hired and 35 were rejected. In February 1985, one applicant died, leaving 34 predecessor employees at issue
The ALJ heard testimony from 12 of the 34 former Chrysler employees. Following the testimony of the twelfth witness and in the absence of any objection, the ALJ concluded that the remaining 22 witnesses also would testify that they had good work records and were versatile employees. The ALJ invited rebuttal from U.S. Marine on the issue and declined to take further testimony from the remaining witnesses
A subsequent projection, prepared by U.S. Marine's accounting department on February 15, 1984, took into consideration an expected absentee rate lower than that used by Mr. Hoag. This schedule indicated that U.S. Marine would require only 380 employees by June of 1984
Such clauses "permit the Board to examine the books and records of a respondent and to take statements from its officers and employees and others for the purpose of determining or securing compliance with a court-enforced order." Cherokee Marine Terminal, 287 N.L.R.B. No. 53, 128 L.R.R.M. (BNA) 1051, 1052 (1988). The ALJ's recommended visitorial clause in this case read as follows:
For the purpose of determining or securing compliance with this Order, the Board, or any of its duly authorized representatives, may obtain discovery from Respondents, their officers, agents, successors or assigns, or any other person having knowledge concerning any compliance matter, in the manner provided by the Federal Rules of Civil Procedure. Such discovery shall be conducted under the supervision of the United States Court of Appeals enforcing this Order and may be had upon any matter reasonably related to compliance with this Order, as enforced by the Court.
Administrative Law Judge's Decision (ALJD) at 35.
Because NLRB Member Cracraft concluded that this issue was not fully litigated, she dissented, on due process grounds, from the decision to reinstate the previous terms and conditions of employment
See NLRB v. Link-Belt Co.,
This test concerning the respective burdens of proof in a labor case was developed by the Board in Wright Line,
Notes
11 U.S. Marine maintains that this finding conclusively precludes any determination that the company discriminated against 34 applicants because they were Union members who formerly worked for Chrysler. The point of this statement, however, is that the company's unlawful scheme to avoid a bargaining obligation was furthered by the refusal to hire some of the former Chrysler employees, not by the refusal to hire those specific applicants.
See Fall River Dyeing & Finishing Corp. v. NLRB,
Of course, this expectation was not borne out; 98% of the former Chrysler employees applied for a job with U.S. Marine, and the company hired approximately 86% of those who applied
As set forth more fully in the statement of the facts, Mr. Hoag modified the employee projection figure based on an increased production schedule and Chrysler's 1983 absenteeism rate. However, without explanation, Mr. Hoag also increased the company's estimated production. Moreover, Mr. Hoag used an absentee rate that was based on Chrysler's benefits plan, a plan that obviously did not apply to U.S. Marine employees
Also, applicants who inquired about the status of their applications were told that they were still under consideration, and the Union was informed as late as July of 1984 that the 34 applicants remained under consideration. This is consistent with the applicants' testimony that they never were informed why they had not been hired
We do not disagree with U.S. Marine's contention that "a strong initial decision [by the ALJ] opposite to the Board's decision requires [the court] to consider the evidentiary and analytical basis of the Board's decision with special care." International Union, UAW v. NLRB,
The Board asserts that we lack jurisdiction over this part of the appeal. Section 10(e) of the Act (29 U.S.C. § 160(e)) provides that, absent extraordinary circumstances, we may not consider objections that were not presented to the ALJ or Board. The Board argues that our review of this claim is precluded by U.S. Marine's failure to move for reconsideration of the remedial order. We reject the Board's argument. We have noted that section 10(e) serves to (1) ensure that the Board has the opportunity to resolve issues within its jurisdiction, and (2) avoid repetitious appeals to the courts. NLRB v. Wayne Transp.,
The Board has construed the word "all" to mean "all or substantially all." Kallmann v. NLRB,
The Ninth Circuit in Kallmann concluded that a successor was obligated to consult with the union before setting the terms and conditions of employment and that failure to do so constituted a violation of the Act.
See also Elastic Stop Nut Div. of Harvard Indus., 294 N.L.R.B. No. 88, 131 L.R.R.M. (BNA) 1759, 1760 (1989), enforced,
This is not to say that U.S. Marine also must retain all unilateral changes that are beneficial to the employees. In its order, the Board required U.S. Marine to rescind all detrimental unilateral changes and reinstitute the terms and conditions of employment that were in effect when Chrysler closed its doors. The Board noted that nothing in its order was "to be construed as requiring rescission of any wage increase or other benefits that previously have been granted the unit employees." D & O at 9 n. 6. Thus, the Board did not require U.S. Marine both to restore the status quo ante and leave in place all beneficial changes, such as the wage increase implemented on January 21, 1985, but left that decision up to the company
The Board's Spruce-Up doctrine has been endorsed and somewhat reformulated by the Second Circuit. See Saks & Co. v. NLRB,
[A] successor employer is required to bargain with respect to initial terms only if it is perfectly clear that it plan [sic] to retain all the employees in the predecessor unit and hires those employees in a manner which leads them to believe that they will be hired on the terms and conditions that existed under the predecessor employer.
Under the Second Circuit's formulation of the Burns exception, a union must show: (1) that it was perfectly clear that the employer intended to rehire substantially all of the predecessor's employees; and (2) that it intended to do so on identical terms. Applied literally, this reformulation of the Burns exception would appear to limit the Burns exception to situations where the employer announces that it intends to offer exactly the same terms; there would only be a duty to bargain with the union when nothing will be changed. However, this is an issue that we need not confront definitively in this case. In none of these cases did the Board find that the employer had discriminated against former employees because of their union membership. Here, by contrast, the Board found that substantially all the predecessor's employees would have been retained but for the successor's unlawful discrimination. Under these circumstances, an employer whose unfair labor practices have created ambiguity as to whether substantially all of the predecessor's employees would have been retained will not be permitted to profit from the situation. Instead, the Board will presume that, but for the discriminatory practices, substantially all of the employees would have been retained and the employer would be obliged to consult with the union before setting new terms.
See also NLRB v. Strong,
See also Sinclair Glass Co., 188 N.L.R.B. No. 33, 76 L.R.R.M. (BNA) 1289 (1971), enforced,
not believe that our make-whole remedy should be withheld on the ground that the Charging Party and the General Counsel have not requested such a remedy or the circumstance that the Respondent has not violated Section 8(a)(5) as well as Section 8(a)(3) in this instance. It is a principle too well established in Board law to require citation of authority that a question of remedy is within the discretion of the Board. Section 10(c) [29 U.S.C. § 160(c) ] directs the Board ... "to take such affirmative action ... as will effectuate the policies of this Act."
Id. at 1291 (emphasis in original). Similarly, we do not believe that the status quo ante remedy, which was imposed to make whole U.S. Marine's employees, should be deleted from the Board's order.
In Winchester Electronics,
The company asserts that it would have offered additional evidence that applicants were informed in advance that they would be working under different terms. However, U.S. Marine established that point, and further evidence would have been merely cumulative
See Keystone Steel & Wire,
The Union relies upon Teamsters Local Union No. 171 v. NLRB,
Moreover, the order we enforce today allows the Board access to U.S. Marine's records relevant to compliance with the back pay and reinstatement provisions. Although the evidence certainly supports the Board's determination that U.S. Marine engaged in multiple unfair labor practices, there is not such overwhelming evidence of a likelihood that the company will "fail to cooperate or otherwise attempt to evade compliance," Cherokee Marine Terminal, 287 N.L.R.B. No. 53, 128 L.R.R.M. (BNA) 1051, 1054 (1988), that we can say it was an abuse of the Board's discretion not to include a visitorial clause
As a threshold matter, we reject the Union's contention that, because the Board did not articulate its reasons for denying the Union's requested relief, this case must be remanded. The Union relies on K & I Transfer & Storage, Inc. v. NLRB,
But see NLRB v. Food Store Employees Union,
This is true even when the employer has committed "flagrant" unfair labor practices and engaged in " 'clearly aggravated and pervasive misconduct.' " Workroom for Designers,
Section 1001 provides as follows:
Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both.
18 U.S.C. § 1001.