Gulf States Manufacturers, Inc. v. National Labor Relations Board

598 F.2d 896, 101 L.R.R.M. (BNA) 2805, 1979 U.S. App. LEXIS 13308

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 10, 1979
• Docket: 77-2406
• Status: Published

Opinions

GODBOLD, Circuit Judge:

In this case the National Labor Relations Board included in a complaint against an employer unfair labor practice charges that the charging union had withdrawn by agreement with the employer but later had refiled. In the ensuing case the Board found that the employer had committed some of the unfair practices. A panel of this court held that the union could not reallege or reinstate the charges it had withdrawn by agreement and that the Board could not include the realleged charges in the complaint.¹ The court en banc concludes that the Board should not have made the realleged charges the subject of findings of unfair labor practices.

The union received a majority in a Board election conducted in September 1975. The employer filed objections to the election. The union then filed unfair practice charges. Before matters proceeded much further, on or about November 7, 1975, the union and the employer entered into a written stipulation set out in the margin.² Under its terms, the employer agreed to withdraw with prejudice its pending objections to the election, (Is 1 and 7) and the union agreed to withdraw with prejudice its pending unfair practice charges (Us 2 and 7). The parties agreed that the union would be certified forthwith as bargaining agent and good faith bargaining should commence (1 6). The stipulation served as a joint request to the Regional Director for withdrawal of the objections and charges “and that such withdrawals be with prejudice.” a n

The stipulation was filed with the Regional Director. He wrote the parties on November 11, 1975, saying:

This is to advise that I have approved the Withdrawal Requests submitted in this matter.

The same day he certified the union.

The charges withdrawn by the union had alleged that beginning in late August 1975 the employer had laid off employees because of union membership, unilaterally changed terms and conditions of employment, made various coercive statements, and had blamed a wage freeze on the union.³ The employer’s objection to the election which was withdrawn charged that secrecy of the ballot was not maintained during the election.

Bargaining commenced November 21. In February 1976 it broke down, and the union went on strike for a week beginning February 14. On February 17 the union filed the unfair practice charges that began the present case, consisting of reallegation of some of the withdrawn charges plus a new charge of failure to bargain in good faith. Negotiations resumed and broke down again. The union amended the charges several times thereafter. The Board issued a complaint in April and amended it in July to consolidate all of the union’s charges including those that had been withdrawn and realleged.

Before the ALJ the employer moved to dismiss from the complaint the realleged charges on the grounds they were time-barred by the six months’ statute of limitations in § 10(b) of the Act, and that the Regional Director abused his discretion in including them in the complaint when amended in July. The ALJ denied the time-bar on the ground that the February charges had been filed within six months of the occurrence of the withdrawn matters and were sufficiently related to the withdrawn charges that the withdrawn charges could be deemed filed with the February charges. The ALJ found also that the Regional Director did not abuse his discretion by including the withdrawn charges in the amended complaint.

The ALJ went on to find that the employer had committed various 8(a)(1) and 8(a)(3) pre-stipulation violations that had been included in the withdrawn charges and also various violations that had occurred after bargaining broke down in February, including failure to bargain in good faith.

The Board adopted the ALJ’s findings of fact and affirmed his conclusions of law. The employer appealed, and the Board cross-appealed for enforcement. A panel of this court, in a two-to-one decision, found the employer had not failed to bargain in good faith and denied enforcement except for post-strike 8(a)(l)’s. The panel found that the union could not “reinstate” the charges because it had withdrawn them with prejudice, and also, since the employer had relied to its detriment on the union’s promise, the union was estopped from “reinstating” the charges. With respect to the Board, the court found that the Board was “legally and morally bound” by the withdrawal agreement because, through the Regional Director, it approved the agreement and, pursuant to it, certified the union; this, the court held, “made the Board a party to the agreement.” 579 F.2d at 1307.

We granted the petition of the Board for rehearing en'banc because of our concern with the holdings concerning the effect of the agreement to withdraw charges and the Board’s treatment of the charges withdrawn and realleged.⁴ The court en banc does not disagree with the conclusion of the panel that the employer did not fail or refuse to bargain in good faith and with the conclusion that the employer committed post-strike 8(a)(l)’s. We agree with the Board, however, that Supervisor Perrigan’s statement to employee Parker, that the lack of a wage increase was due to union activity, occurred in January 1976, after the stipulation was made, and, therefore, was not within the withdrawn charges, and we agree that this violated § 8(a)(1). We cannot tell from the record whether Perrigan’s statement to employee Harris concerning wage increases occurred before or after the stipulation — the testimony merely says it occurred in November. This portion of the case must be remanded to the Board for further factual development.

The court holds that the Board did not abuse its discretion in permitting the union to reassert the withdrawn charges or in issuing a complaint that included the withdrawn charges. It did, however, abuse its discretion in making the withdrawn and reasserted charges the subject of findings of unfair labor practices. Because of our conclusion it is not necessary that we explore the factually complex issue of the application of the statute of limitations to the various charges and numerous reallegations of charges.⁵

In considering whether the Board should have found the employer guilty of the withdrawn charges, we keep in mind two broad considerations: the integral role that requests to withdraw charges play in the adjustment of labor disputes in our country and the Board’s role as an exponent of public interests rather than private rights. For the fiscal year 1977, approximately one-third of all unfair practice charges filed with the Board were disposed of by a Regional Director’s approval of withdrawal requests made by parties before complaints were issued.⁶ It is apparent that withdrawal of charges is a favored means of settling labor disputes by unions, employers and the Board.⁷ The Board considers voluntary adjustments of labor disputes an essential method of implementing national labor policy.⁸

The procedures adopted by the Board for handling unfair practice, charges reflect its policy of encouraging voluntary settlement of labor disputes. When charges are filed in the Regional Director’s office the charging party is requested “to submit promptly evidence in its support.” 29 C.F.R. § 101.4. The person against whom the charges are filed is given an opportunity to respond. A field staff member investigates the charges. If after investigation the Regional Director concludes that there is no basis for the charges he recommends that they be withdrawn. Id. § 101.5. If the complainant accepts the recommendation the charges are withdrawn; if he rejects the recommendation, the Regional Director dismisses the charges. Id. § 101.6.⁹

If, as in this case, the Regional Director concludes that the charges can be substantiated, the parties are given an opportunity to settle the case before a complaint is issued. Id. § 101.7. Only when attempts at informal adjustments have failed may a complaint issue. Id. § 101.8; see NLRB v. Local 264 Laborers’ International Union, 529 F.2d 778 (CA8, 1976). After the issuance of a complaint the Board favors formal settlements, which often include the Board’s entering an order. See generally NLRB v. Oil, Chemical & Atomic Workers International Union, 476 F.2d 1031 (CA1, 1973); Leeds & Northrup Co. v. NLRB, 357 F.2d 527 (CA3, 1966). This is discussed further infra.

The Board acts in the public interest to enforce public, not private rights. National Licorice Co. v. NLRB, 309 U.S. 350, 364-65, 60 S.Ct. 569, 577-78, 84 L.Ed. 799, 810-11 (1940); Amalgamated Utility Workers v. Consolidated Edison Co., 309 U.S. 261, 265-66, 60 S.Ct. 561, 563-64, 84 L.Ed. 738, 742 (1940); Agwilines, Inc. v. NLRB, 87 F.2d 146, 150-51 (CA5, 1936). Section 10(a) of the Act explicitly provides that the Board’s power to prevent unfair labor practices “shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, law, or otherwise . .” Accordingly, the “parties cannot by contractual agreement divest the Board’s function to operate in the public interest.” Boire v. Int’l Brotherhood of Teamsters, 479 F.2d 778, 803 (CA5, 1973).

Requests to withdraw charges filed with the Board may arise, and be dealt with, in varying contexts. There may be a unilateral request by the complainant for withdrawal of charges, 29 C.F.R. § 101.5, which may or may not be part of a settlement between the parties, and, if there is a settlement agreement, it is not necessarily revealed to the Regional Director. The Regional Director’s consent to the unilateral request for withdrawal is required, NLRB v. Wemyss, 212 F.2d 465, 468 (CA9, 1954); 29 C.F.R. § 102.9, which is consistent with the duty of the Board to enforce public rights rather than private rights. See Garner v. Teamsters, Chauffeurs & Helpers, Local Union 776, 346 U.S. 485, 492, 74 S.Ct. 161, 166, 98 L.Ed. 228, 240 (1953). For example, a private party might conclude that it is in his best interest to withdraw a charge; the Regional Director, however, could conclude that the public interest would be better served by a formal resolution of the dispute.

The parties may submit to the Regional Director a proposed settlement of differences between them, and if he concludes that the settlement adequately remedies the violations of the Act, he approves it. This informal settlement procedure is covered by 29 C.F.R. § 101.7. “Proof of compliance is obtained by the regional director before the case is closed. If the respondent fails to perform his obligations under the informal agreement, the regional director may determine to institute formal proceedings.” Id.

There also may be a formalized agency-approved settlement agreement under 29 C.F.R. § 101.9, in which there is even greater participation by the Board in the adjustment of the labor dispute. Such a settlement must be approved by the Board and provides that “the parties agree to waive their right to [a] hearing and agree further that the Board may issue an order requiring the respondent to take action appropriate to the terms of the settlement.” 29 C.F.R. § 101.9(b)(1). The settlement usually contains the respondent’s consent “to the Board’s application for the entry of a decree by the appropriate circuit court of appeals enforcing the Board’s order.” Id. If a court order is entered the respondent may be held in contempt for failure to comply with the terms of the settlement agreement. Id. at § 101.9(e)(1). The settlement operates in the nature of a consent order, entered with the public interest in mind and in general has the effect of a judgment.

The action of the parties in this case and the response of the Regional Director do not fit precisely into any of the foregoing possibilities. The agreement between employer and union was not a private deal, off in limbo and unrelated to the Board. It bears no substantial resemblance to the unilateral withdrawal of charges contemplated by § 101.5. The agreement, the joint request for withdrawal with prejudice and the Regional Director’s response; taken together, were something less than a § 101.7 informal settlement agreement but closer to that than anything else. They do not resemble at all a § 101.9 formal settlement.

On receipt of the stipulation the Regional Director might have told the parties to proceed with a § 101.7 informal settlement. An agreement of this type was drafted by an investigator in the Regional Director’s Office but never executed. Or he could have declined to permit withdrawal of objections and charges so long as the stipulation provided that the withdrawals would be “with prejudice”; the parties then could have accepted his proposal, or renegotiated, or called off the withdrawals and let the three cases proceed. The Regional Director did none of these, however. Without stating any reservation to his approval — -in fact, without reference to the “with prejudice” terms of the agreement — he notified the parties that he approved the “Withdrawal Requests.”

We turn then to consider the legal standards that should govern Board action in the circumstances that we have described. The panel found that the Board was estopped. But traditional notions of estoppel do not apply to the Board. Wallace Corp. v. NLRB, 323 U.S. 248, 253, 65 S.Ct. 238, 240, 89 L.Ed. 216, 226 (1945). “The Board has power to fashion its procedure to achieve the Act’s purpose to protect employees from unfair labor practices. We cannot, by incorporating the judicial concept of estoppel into its procedure, render the Board powerless to prevent an obvious frustration of the Act’s purposes.” Id.

In Wallace the Court allowed the Board to set aside a formal settlement agreement because the purpose of the settlement had failed and Board action was needed to prevent frustration of the Act. The Court went on to approve the standard used by the Board for deciding when to go behind a formal settlement:

[The Board] ordinarily will respect the terms of a settlement agreement approved by it. It has consistently gone behind such agreements, however, where subsequent events have demonstrated that efforts at adjustment have failed to accomplish their purpose, or where there has been a subsequent unfair labor practice.

Id. at 254, 65 S.Ct. at 241, 89 L.Ed. at 226 (footnotes omitted). Since Wallace the courts have consistently allowed the Board to disregard formal settlements when the test laid out in Wallace has been met. NLRB v. International Union of Operating Engineers, 460 F.2d 589, 597 (CA5, 1972); NLRB v. Local 269, International Brotherhood of Electrical Workers, 357 F.2d 51, 56 (CA3, 1966). The courts have applied the same test to determine when the Board may go behind an informal settlement agreement. NLRB v. Arrow Specialties, Inc., 437 F.2d 522, 526 (CA8, 1971); NLRB v. Southeastern Stages, Inc., 423 F.2d 878, 880 (CA5, 1970); NLRB v. Bangor Plastics, Inc., 392 F.2d 772, 775-76 (CA6, 1967); Lincoln Bearing Co. v. NLRB, 311 F.2d 48, 50 (CA6, 1962). Although the courts have not articulated reasons for applying the Wallace standards to informal settlements, the result reached in those cases is firmly anchored in the national policy of settling labor disputes by voluntary agreement. Some certainty that a settlement agreement will indeed settle the dispute of the parties is needed to encourage voluntary settlement. At the same time the Wallace standards give the assurance that informal settlement agreements cannot be used to impede the Board’s implementation of the Act. We are guided by the same policy concerns in choosing the standard to be used in this case to review the Regional Director’s actions.

We conclude that the Wallace standards should be applied. The joint request for withdrawal was part of an overall voluntary settlement of the labor dispute. The entire agreement between the parties was before the Regional Director. He knew the plenary nature of the agreement and knew that the parties had agreed that each of their withdrawals of charges was with prejudice. The agreement was entirely consistent with national labor policy — lay aside differences over the election and the past unfair practice charges, get the union certified and in place, and get the parties to the bargaining table.¹⁰ The Regional Director also knew that the agreement could not be effective unless he approved the joint request for withdrawal. Where such a request is only part of an overall settlement and the Regional Director agrees to the withdrawal, some assurance is necessary that his approval and resulting settlement of the withdrawn charges cannot be set aside merely because one of the parties has brought new charges. The Wallace standards effectively provide the necessary assurance while leaving the Regional Director free to act if it turns out that the policies of the Act have been frustrated.

The case principally relied upon by Judge Vance in his dissent, NLRB v. Zimnox Coal Co., 336 F.2d 516 (CA6, 1964), holds that the Board has broad discretion to go behind a withdrawal request. Broad discretion does not mean unreviewable discretion. The standards approved in Wallace are appropriate for determining whether the Regional Director misused his discretion in this instance.¹¹ Nor will our decision impede the Board’s procedures for handling unfair labor practice charges and for permitting withdrawals. It does not relate to simple unilateral requests for withdrawal, and the Regional Director retains his discretion to withhold his approval of requests for withdrawals with prejudice.

We now know that the first prong of Wallace has no application here. The agreement did not fail in its purpose. Turning to the second prong, the mere occurrence of some unfair labor practice after withdrawal of the charges had been approved was not enough to permit the Board to find the employer guilty of them when realleged. To construe the holding in Wallace so broadly would defeat the policies undergirding voluntary adjustment of industrial disputes. Rather the Board must consider the relationships between the subsequent unfair practices and the agreement and its purposes.

Wallace and the cases following it involve situations where the subsequent unfair practice charges breached or defeated the settlement agreement. In Wallace the Court stated that “[t]he settlement agreement plainly implied that the old employees could return to their jobs with the company simply by becoming members of whichever union would win the election. Nevertheless the company entered into an agreement with Independent which inevitably resulted in bringing about the discharge of a large bloc of C.I.O. men and their president.” 323 U.S. at 252, 65 S.Ct. at 240, 89 L.Ed. at 225. The Court concluded that entering into a union shop agreement was an unfair labor practice on the facts before it. Id. at 255, 65 S.Ct. at 241, 89 L.Ed. at 227. The subsequent unfair practice defeated the settlement agreement. Similarly in NLRB v. Southeastern Stages, Inc., supra, although this court stated that a subsequent unfair labor practice is grounds for setting aside a settlement agreement, without limiting the type of unfair practice, the court went on to say that “[a] settlement agreement may be set aside where, as here, a showing is made that the agreement terms have been breached.” Id. at 880.¹² A final example is NLRB v. Arrow Specialties, Inc., supra. The Eighth Circuit found that a settlement agreement in which the company promised not to interfere with employees’ § 7 rights could be set aside because the company subsequently interrogated employees in violation of 8(a)(1), a clear breach of the terms of the settlement agreement. 437 F.2d at 526.

This case demonstrates the unfortunate effect that would be created by a mechanical rule that any post-agreement unfair practice permits the Board to find an employer guilty of charges withdrawn with approval and later resurrected. The purposes of the November stipulation were achieved. The election was made effective and the union certified and bargaining occurred. The employer discharged the obligation, imposed upon it by the statute and the agreement, to bargain in good faith. The post-stipulation unfair practices occurred in March ¹³ and involved interrogation of replacement workers who had been employed as a result of the February strike concerning their union activity, threats of loss of job if they joined the union, and orders to report any union solicitation. The board held these were 8(a)(1) violations, this court granted enforcement of this portion of the Board’s order, and the court en banc agrees. But these unfair practice charges did not violate the company’s promise to bargain in good faith nor did they substantially frustrate, interfere with or impede it. These unrelated occurrences, taking place considerably after good faith bargaining had begun and after a strike, could not appropriately be the basis for disregarding what had been agreed upon, what had been approved, and what had been achieved. To disregard these things stands on its head the policy of voluntary adjustment of disputes. The incentives for voluntary disposition of industrial disputes, and for bargaining without the necessity of a Board order, are substantially eroded if the occurrences in this case are burdened with an implied condition that the Board may disregard what has occurred if either party commits any unfair labor practice in the future. Implementation of voluntary adjustment of disputes is especially significant when the disputes center around an election and the agreement is to lay aside the disputes, get the union certified and get on with bargaining. Obviously the situation here would be different if the employer had failed to carry out its duty, and agreement, to bargain in good faith or the subsequent unfair practices had hindered implementation of the agreement.

It is obvious that a mechanical rule would have the advantage of simplicity. Judge Vance would allow the Regional Director unreviewable discretion to permit charges to be reasserted and to be the subject of unfair practice findings. At the other end of the spectrum, Judge Fay would not permit the charges to be reasserted at all. The middle course adopted by the court en banc permits the charges to be reasserted and included in a complaint and to be the subject of unfair practice findings if “subsequent events [that is, post-withdrawal] have demonstrated that efforts at adjustment have failed to accomplish their purpose, or there has been a subsequent unfair labor practice.” Wallace, 323 U.S. at 254, 65 S.Ct. at 241, 89 L.Ed. at 226. Here the “subsequent events” were determined at the complaint hearing. Those events, measured by what we consider correct standards, reveal that the employer had neither breached the agreement by refusing to bargain in good faith nor frustrated nor impeded it nor committed any subsequent unfair labor practice having any substantial relationship to it. These circumstances mandated that resurrection of the charges previously withdrawn was not justified and they then dropped out of the case.¹⁴

As parts of the opinion of the en banc court we adopt Parts II, III and IV of the panel opinion. The Board’s order is ENFORCED in part, DENIED in part, and the case is REMANDED to the Board for further proceedings with respect to whether the Perrigan-Harris conversation was barred by the stipulation.

1 . Gulf States Manufacturers, Inc. v. NLRB, 579 F.2d 1298 (CA5, 1978).

2 . “United States of America

Before the National Labor Relations Board

Region Twenty-Six

Gulf States Manufacturing, Inc ,

Employer,

and

International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL CIO,

Petitioner and Charging Party (Union)

Case Nos.

26 RC 5064

26 CA -5786

26 -CA 5812

STIPULATION

In consideration of the mutual covenants, the undersigned, by and through their attorneys or other authorized representatives do hereby stipulate as follows:

1. The Employer agrees to withdraw with prejudice its Objections to the Election and Exceptions to the Regional Director’s Report on Objections in Case No. 26-RC -5064; and

2. The Union, in consideration of the Employer’s agreement to withdraw its Objections to the Election, agrees to withdraw with prejudice its unfair labor practice

charges in Cases Nos. 26 CA 5786 and 26 CA 5812; and

3. There are no other pending Objections to the Election held in Case No. 26 RC 5064 on September 12, 1975; and

4. There are no other unfair labor practice charges pending against the Employer by the Union; and

5. The Union represents that it has been authorized by affected employees in Charge No. 26 CA 5786 and Charge No. 26 CA 5812 to enter into this Stipulation; and

6. The Parties agree that Certification of Representative should issue forthwith and that good faith negotiations shall commence thereafter at mutually convenient dates, times and places; and

7. The Parties hereby agree that this Stipulation shall also constitute a joint request to the Regional Director, Region 26, for withdrawal of the Objections to the Election and all pending unfair labor practice charges and that such withdrawals shall be with prejudice.

International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL CIO

Curtis Orman 11 7 75

Gulf States Manufacturing, Inc.

Scott P. Watson 11/5/75”

3 . These charges are described in full at 579 F.2d 1301-02.

4 . For two reasons we conclude that the stipulation intended to withdraw all unfair practice charges that the union might have had as of November 11. First, it provides that in addition to the two sets of charges specifically withdrawn, “[t]here are no other unfair labor practice charges pending against the Employer by the Union.” Second, under the “related charges” rule, the Board could have issued a complaint including all of the alleged unfair labor practices occurring up to November 11, though not explicitly charged in the union’s filings. See generally Steve’s Sash & Door Co. v. NLRB, 401 F.2d 676 (CA5, 1968).

5 . Nor do we reach the issue whether the Board is required to follow, and whether it did follow, the prócedures for handling withdrawn charges, provided in § 10120.5 of its Case Handling Manual.

6 . Forty-second Ann.Rep. of the NLRB 5 (1977).

7 . See Memorandum 79—41 from General Counsel to Regional Directors, reprinted in 4 Lab.L. Rep. (CCH) * 9164 (Aug. 11, 1978).

8 . Id. See also Wallace Corp. v. NLRB, 323 U.S. 248, 253-54 & n.8, 65 S.Ct. 238, 240-41 & n.8, 89 L.Ed. 216, 226 & n.8 (1944).

9 . The complainant has a right to appeal a dismissal to the general counsel in Washington, D. C. 29 C.F.R. § 101.71.

10 . If it turned out that the agreement frustrated national labor policy, the Regional Director, as the exponent of national labor policy, would have, under Wallace, the discretion to disregard the agreement.

11 . In fact, the Zimnox court cited Wallace as support for its conclusion that permission to refile withdrawn charges lies in the discretion of the Regional Director.

12 . The Southeastern Stages court correctly rejected the argument that a settlement agreement may be set aside only where “the violator has breached its terms by engaging in the same type of conduct as covered by the agreement.” 423 F.2d at 880. it need not be the same type of conduct but need only impede or frustrate the implementation of the agreement.

13 . Except for the Perrigan-Parker conversation in January. Although that conversation involved a supervisor’s blaming the union for a lack of wage increases, a topic of the negotiations, the possibility is very remote that this single occurrence could have hindered the negotiations then going on. The same is true of the November conversation between Perrigan and Harris, if it is not barred by the stipulation.

14 . The events subject to the stipulation were not barred from being used as evidence tending to prove unfair labor practices not subject to the stipulation. NLRB v. Southeastern Stages, Inc., supra at 880 & n.2; Steve’s Sash & Door Co. v. NLRB, supra at 678.