Mosey Manufacturing Company, Inc. v. National Labor Relations Board

701 F.2d 610, 112 L.R.R.M. (BNA) 2822, 1983 U.S. App. LEXIS 30380

• Court: Court of Appeals for the Seventh Circuit
• Decided: February 18, 1983
• Docket: 81-1668
• Status: Published

Opinions

POSNER, Circuit Judge.

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., 228 N.L.R.B. 1311 (1977), that it would no longer try to protect workers from misrepresentations made by either management or union in election campaigns, as it had done during the regime of Hollywood Ceramics Co., 140 N.L.R.B. 221 (1962). In presenting its case to the Board, Mosey emphasized the union’s alleged threats of physical violence during the campaign, because this was a good ground under Shopping Kart for setting aside the election, but it also tried to show that the union had misrepresented a wage increase which it had gotten for workers at another plant.

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., 239 N.L.R.B. 619 (1978), in which it overruled Shopping Kart and reinstated Hollywood Ceramics, but without saying whether it meant the new rule to apply to pending cases. Although the Board’s counsel urged this court to apply Hollywood Ceramics to this case, see NLRB v. Mosey Mfg. Co., 595 F.2d 375, 377 (7th Cir.1979), we instead remanded the case to the Board, and “express[ed] no view on the merits of any objection to the election.” Id. at 375 n. 2.

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, 110 L.R.R.M. 1489 (Aug. 4, 1982), which overruled General Knit and reinstated Shopping Kart. The Board stated that the new rule applied “to all pending cases in whatever stage.” 263 N.L.R.B. No. 24 at p. 21 n. 24, 110 L.R.R.M. at 1494 n. 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., 355 F.2d 854, 859-62 (2d Cir.1966). The present case is so unusual, however, that we cannot be sure it was in the Board’s contemplation when the Board announced in a footnote that the new rule would apply to all pending cases. More than five years have passed since-the union won the election by one vote. No one knows whether the carpenters’ union is still preferred by a majority of the bargaining unit — it may be, but equally it may not be. In addition, by twice during this proceeding changing its mind as to the applicable standard the Board has put Mosey through the hoops, subjecting it to protracted legal expense and uncertainty (though at the same time, it must be admitted, allowing the company to stave off the evil day when it must bargain with the union). We cannot be certain that if this case is remanded the Board will apply Shopping Kart and order the company to bargain with a union that won an election by one vote, perhaps procured through misrepresentations, many years ago.

In these circumstances, unless we can properly enforce the Board’s order without a remand, we shall deny enforcement outright. In asking us to enforce its order the Board is appealing to our equitable powers, cf. NLRB v. Apico Inns of California, Inc., 512 F.2d 1171, 1175 (9th Cir.1975), and we must ask what equity the Board would have if, after again ordering the company to bargain with the union, it came back to us asking for enforcement of its order. The election would still have been won by only one vote, but not five years ago, rather six or seven, the whole interval due mainly to the Board’s inability to decide what standard to use in policing elections — it has changed its collective mind three times in the last five and a half years. When a party asking a court to do equity has strung out the proceeding to the point where the court cannot determine whether equitable relief would achieve the legitimate purposes of the suit, which in this case is to give a unit of Mosey’s workers the collective bargaining representative of their choice, the court will withhold its assistance. See, e.g., NLRB v. Nixon Gear, Inc., 649 F.2d 906, 914 (2d Cir.1981); cf. NLRB v. Majestic Weaving Co., supra, 355 F.2d at 86. The best protection for these workers’ freedom of choice would be a prompt new election, which a remand will not accomplish.

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., 688 F.2d 871, 881 (2d Cir.1982), and the present case is an even stronger one for outright denial — provided Mosey has a winning case under Hollywood Ceramics. If it does not it has no basis for resisting enforcement. The only issue Mosey asked us to decide in this round of judicial review was whether the election should be set aside under the Hollywood Ceramics standard. So long as that standard seemed to be the law — so long as it was applied to this case — the company was content to proceed under it and not try to make out a case under Shopping Kart. If Mosey has no case under Hollywood Ceramics, it cannot complain if we order enforcement. So we must decide whether the Board’s order is valid under Hollywood Ceramics.

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, 576 F.2d 119,124 (7th Cir.1978)), and it was made in the course of a closely fought campaign. It could have swayed a single vote and that was all that would have been necessary to change the outcome.

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., 584 F.2d 1099, 1101 (1st Cir.1978); NLRB v. Fenway Cambridge Motor Hotel, 601 F.2d 33, 36 (1st Cir.1979); Schneider Mills, Inc. v. NLRB, 390 F.2d 375, 378 (4th Cir.1968); Kustom Electronics, Inc. v. NLRB, 590 F.2d 817, 822 (10th Cir.1978), though only the First Circuit has given reasons for its choice. The Third, Fifth, Sixth, and Ninth Circuits either use substantial evidence as the sole standard or treat “abuse of discretion” as synonymous in this context with “unsupported by substantial evidence.” See Jamesway Corp. v. NLRB, 676 F.2d 63, 67-69 (3d Cir.1982); NLRB v. South Miss. Elec. Power Ass’n, 616 F.2d 837, 839 (5th Cir. 1980); Harlan # 4 Coal Co. v. NLRB, 490 F.2d 117, 120, 124-25 (6th Cir.1974); NLRB v. Big Three Industries, Inc., 602 F.2d 898, 901 (9th Cir.1979). The Second and Eighth Circuits are hard to “read” on the issue but seem to treat the two standards as interchangeable. See Bausch & Lomb Inc. v. NLRB, 451 F.2d 873, 876, 877 n. 6 (2d Cir. 1971); LaCrescent Constant Care Center, Inc. v. NLRB, 510 F.2d 1319, 1324 (8th Cir.1975); NLRB v. Target Stores, Inc., 547 F.2d 421, 424-25 (8th Cir.1977).

In this circuit, a number of decisions apply the abuse of discretion standard: Macomb Pottery Co. v. NLRB, 376 F.2d 450, 452 (7th Cir.1967); Follett Corp. v. NLRB, 397 F.2d 91, 94 (7th Cir.1968); NLRB v. Red Bird Foods, Inc., 399 F.2d 600, 602 (7th Cir.1968); Louis-Allis Co. v. NLRB, 463 F.2d 512, 519 (7th Cir.1972); NLRB v. Martz Chevrolet, Inc., 505 F.2d 968, 970 (7th Cir.1974); NLRB v. Southern Health Corp., 514 F.2d 1121, 1123-24 (7th Cir.1975). Others apply the substantial evidence standard (one is the previous panel decision in this case, and arguably therefore is the law of the case): Celanese Corp. of America v. NLRB, 291 F.2d 224, 225 (7th Cir.1961); NLRB v. Mosey Mfg. Co., supra, 595 F.2d at 377 n. 5; and Midwest Stock Exchange v. NLRB, 620 F.2d 629, 632 (7th Cir.1980). One equates the two standards: Peerless of America, Inc. v. NLRB, supra, 576 F.2d at 122. Although our most recent decision (Midwest) applied the substantial evidence-standard, its persuasiveness is weakened by the fact that it does not mention the decisions in which other panels of the circuit had taken a contrary approach; and a subsequent dictum in Advertisers Mfg. Co. v. NLRB, 677 F.2d 544, 546 (7th Cir.1982), revives “abuse of discretion.”

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., 426 U.S. 438, 450, 96 S.Ct. 2126, 2133, 48 L.Ed.2d 757 (1976); Sundstrand Corp. v. Sun Chem. Corp., 553 F.2d 1033, 1048 (7th Cir.1977); SEC v. Falstaff Brewing Corp., 629 F.2d 62, 76 (D.C.Cir.1980), or a Federal Trade Commission false-advertising case, see, e.g., Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 300 (7th Cir.1979); we cannot see why it should not be reviewed under the same standard in an election case.

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., 376 U.S. 473, 477, 84 S.Ct. 894, 896-897, 11 L.Ed.2d 849 (1964).

It is also true, but again irrelevant, that the Board enjoys an unusually broad discretion in deciding what rules to apply to election campaigns. This is because the Board has founded its authority to issue such rules on two statutory provisions that contain no standards — the preamble to the Taft-Hartley Act, 29 U.S.C. § 141(b), and section 9(c) of the National Labor Relations Act, 29 U.S.C. § 159(c), which authorizes the Board to conduct representation elections. See Hollywood Ceramics, supra, 140 N.L.R.B. at 223 and n. 3; Peerless Plywood Co., 107 N.L.R.B. 427, 429 (1953). That is why the Board can go from Shopping Kart to Hollywood Ceramics and back again without judicial interference. The courts that have applied an abuse of discretion standard to election disputes have done so precisely because the Board’s authority to regulate elections is plenary, but in so doing have overlooked the difference between discretion in formulating rules and discretion in applying them to facts.

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., 375 F.2d 69, 71 (2d Cir.1967). A decision applying a Board-created election rule to contested facts has none of these characteristics. If the rule forbids material misrepresentations, as the rule of Hollywood Ceramics does, then deciding whether a representation is false, and if so materially, requires the application of an objective standard (material falsehood) to evidence, rather than an exercise of discretion. The Board’s determination of the appropriate bargaining unit illustrates discretionary judgment, see Lammert Industries v. NLRB, 578 F.2d 1223, 1225 (7th Cir.1978), as does its formulation of election rules. But the natural standard to use in evaluating the application of a rule to facts is substantial evidence.

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.