National Labor Relations Board v. Lorimar Productions, Inc., Lorimar Productions, Inc. v. National Labor Relations Board

771 F.2d 1294, 120 L.R.R.M. (BNA) 2425, 1985 U.S. App. LEXIS 23146

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 17, 1985
• Docket: 84-7531, 84-7561
• Status: Published

Opinions

ALARCON, Circuit Judge:

The National Labor Relations Board (hereinafter the Board) applies for enforcement of its order requiring that Lorimar Productions, Inc. (hereinafter Lorimar) bargain with Production Office Coordinators and Accountants Guild Local 717, International Alliance of Theatrical Stage Employees and Moving Picture Machine Operators of the United States and Canada (hereinafter the union). Lorimar cross-petitions for review, contending that its refusal to bargain was justified because (1) the Board certified an inappropriate bargaining unit; (2) the Regional Director conducted the representation election pursuant to an official notice that incorrectly defined the bargaining unit; (3) the Board abused its discretion by failing to afford Lorimar an evidentiary hearing on its objections to the conduct of the election; (4) the Board abused its discretion by extending the union’s certification in its remedial order; (5) the union failed to make a clear and proper demand for bargaining; and (6) Lorimar had a good faith doubt regarding the union’s majority status.

We deny Lorimar’s cross-petition insofar as it asserts that the Board certified an inappropriate unit. Because the Board’s election procedures effectively denied the employees an opportunity to vote for representation in the unit certified by the Board, however, the Board’s application for enforcement of its bargaining order is denied. Consequently, we do not reach Lorimar’s remaining contentions.

I

PERTINENT FACTS AND PROCEDURAL POSTURE

Lorimar is a California corporation whose business is the production of motion pictures and television programs. On November 25,1980, the union filed a representation petition with the Board seeking certification as the bargaining representative of Lorimar’s estimators and production coordinators. The Regional Office conducted a representation hearing on December 19, 1980 to determine a unit appropriate for collective bargaining.

Following the hearing, the Board certified a unit composed of the estimators and production coordinators and directed an election for February 26, 1981. Lorimar filed a request for review of the Board’s decision, contending that a combined unit of estimators and production coordinators was inappropriate because the estimators were technical employees, and arguing that the estimators and production coordinators were confidential and managerial employees.

On February 25, 1981, the Board granted Lorimar’s request for review with respect to the status of production coordinators as confidential employees, and denied review in all other respects. The Board notified the Regional Director of its decision by telephone on the afternoon of February 25. The parties received notification by telegram on the day of the election. Nevertheless, the election took place as originally scheduled. Both production coordinators and estimators voted; the estimators were under the impression that the unit on which they were voting included both the estimators and the production coordinators. Ballots were received from eleven estimators and six production coordinators, and the ballots were segregated and impounded pending the Board’s review decision.

On September 1, 1981, the Board issued a decision on review finding that the production coordinators were confidential employees and excluding them from the unit. Lorimar Productions, Inc., 257 N.L.R.B. 1138, 1139 (1981). The estimators’ ballots were opened and counted on October 1, 1981, and the tally showed six votes for the union, four votes against, and one nondeterminative challenged ballot.

Lorimar filed timely objections alleging that the election results should be set aside because (1) the election was conducted on the assumption that the production managers would be a part of the unit; (2) the union made material pre-election misrepresentations; and (3) the curtain on the voting booth was torn and did not close properly, thus destroying the secrecy of the election. After investigating Lorimar’s objections, the Board overruled them and certified the union as the estimators’ exclusive collective bargaining representative on November 12, 1981. Lorimar filed with the Board a request for review of the Regional Director’s decision. The Board denied Lori-mar’s request, finding that it raised no substantial issues warranting review.

On September 2, 1982, the union requested that Lorimar bargain with it. On November 11, 1982, Lorimar refused. On December 8, 1982, the union filed an unfair labor practice charge alleging that Lorimar had violated National Labor Relations Act (NLRA) §§ 8(a)(1) and (a)(5) by refusing to bargain with the union. The Board issued a complaint, and the union answered. The Board granted General Counsel’s motion for summary judgment on April 26, 1984.

The Board’s order requires Lorimar to cease and desist from refusing to bargain with the union and from interfering with its employees’ NLRA § 7 rights in any similar manner. The order also requires Lorimar to bargain with the union on request and construes the initial period of union certification as beginning on the date Lorimar commences such bargaining with the union.

II

THE .BOARD’S UNIT DETERMINATION

Lorimar contends that because the Board’s unit determination was inappropriate, Lorimar did not commit an unfair labor practice by refusing to bargain with the union. See NLRB v. West Coast Liquidators, Inc., 725 F.2d 532, 534 (9th Cir.1984) (employer does not commit unfair labor practice by refusing to bargain if the Board abused its discretion in certifying the union). Specifically, Lorimar asserts that the Board erred in certifying a unit composed of estimators because they are confidential employees not covered by the NLRA.

We will enforce the Board’s order if the Board’s factual findings are supported by substantial evidence in the record and if the Board correctly applied the law. NLRB v. Carpenters Local Union No. 35, 739 F.2d 479, 481-82 (9th Cir.1984). The Board’s legal conclusion that a unit is appropriate is reviewable only for an abuse of discretion; its unit determinations will be credited on appeal unless clearly arbitrary or capricious. Alaska StateBank v. NLRB, 653 F.2d 1285, 1287 (9th Cir.1981) (iquoting Pacific Southwest Airlines v. NLRB, 587 F.2d 1032, 1037 (9th Cir.1978)). In the instant case, however, the Board’s unit determination is based solely upon its finding that estimators are not confidential employees. This is a factual finding reviewable for. substantial record support. NLRB v. Hendricks County Rural Electric Membership Corp., 454 U.S. 170, 191, 102 S.Ct. 216, 229, 70 L.Ed.2d 323 (1981); NLRB v. Los Angeles New Hospital, 640 F.2d 1017, 1023 (9th Cir.1981).

The NLRA requires that two categories of confidential employees be excluded from bargaining units: (1) those employees who “assist and act in a confidential capacity to persons who formulate, determine, and effectuate management policies in the field of labor relations” (B.F. Goodrich Co., 115 N.L.R.B. 722, 724 (1956)), and (2) “those employees who, in the course of their duties, regularly have access to confidential information concerning anticipated changes which may result from collective-bargaining negotiations.” (Pullman Standard Division, Inc., 214 N.L.R.B. 762, 762-63 (1974)). Union Oil Co. v. NLRB, 607 F.2d 852, 853-54 (9th Cir.1979). The rationale behind the exclusion of confidential employees from the bargaining unit is that employees should not be placed in a position which creates a potential conflict between the interests of the employer and the union. Id. at 853.

Lorimar’s estimators do not fall within either category of confidential employees. The central inquiry in ascertaining whether an employee falls within the first category is whether the employee is in a confidential work relationship with a specifically identifiable managerial employee responsible for labor policy. Id. The record shows that the estimators are supervised by vice president/controller Mary Van Houten, who has no authority to make decisions on labor policy matters.

Lorimar argues that because estimators “work with” unit production managers, the estimators have a confidential relationship with unit production managers.¹ The record demonstrates, however, that the estimators’ relationship with the unit production managers is limited to obtaining information from them for inclusion in the budget, and on occasion providing information regarding existing or mathematically predictable labor costs. The estimators’ occasional performance of such clerical duties for the unit production managers does not demonstrate the existence of a confidential work relationship where the estimators are not generally under their supervision. See Union Oil Co., supra, at 853 (computer operators under the supervision of computer operations manager do not become confidential employees by virtue of furnishing employee information to personnel supervisor who is responsible for labor relations).

Lorimar also contends that the estimators assist the unit production managers in making labor relations decisions, and concludes that performance of these duties places the estimators in a confidential work relationship. The record does establish that on at least one occasion an estimator did calculate Lorimar’s potential liability prior to settlement of a meal payment grievance. An employee is not regarded as confidential, however, simply because he supplies information to someone involved in the handling of grievances. Union Oil, Co., supra, at 853 (computer operators’ responsibility for providing employee information to manager upon request for purposes of resolving grievances and negotiating labor contracts does not render them confidential employees); Weyerhaeuser Co., 173 N.L.R.B. 1170, 1172-73 (1968) (employee is not regarded as confidential merely by virtue of being a secretary to a person involved in the handling of grievances).

Lorimar’s estimators also fall outside of the second category of confidential employees because they do not have access to confidential information that might be used in future contract negotiations. The evidence presented at the representation hearing established that the estimators’ duties include the preparation of a budget showing estimated costs for each episode or production, the monitoring of those costs during production, and the preparation of a post-production report comparing projected and actual costs. The estimators survey the following categories of information in preparing their budgets: (1) budget information received from various department heads; (2) existing labor contracts; (3) “deal memos” (confidential employment agreements negotiated with individual employees with rates and terms of employment above the scale of the collective bargaining agreement) or “start cards” (confidential documents containing a summary of the terms of the deal memo and W-4 tax information); (4) the terms of labor grievance settlements; and (5) employees’ time cards.

Lorimar argues that the estimators’ access to information regarding the precise earnings of each employee, records detailing the amount of any monetary settlement reached in a labor dispute, and capital budget information such as licensing fee revenue received from the networks, constitutes access to confidential information foreshadowing Lorimar’s future bargaining position and potentially acceptable future labor rates. We disagree. In Union Oil Co., supra, we rejected the company’s argument that its computer operators’ access to data concerning its capital and expense budgets and individual personnel information gave them confidential status. Id. at 854. We held that where there was no showing that the capital budget indicated the precise labor rates which the company would accept, or that it otherwise disclosed the company’s bargaining position, employees who have access to personnel or statistical information upon which the company’s labor relations policy is based are not necessarily confidential employees. Id; see also N.L.R.B. v. Jaggers-Chiles-Stovall, Inc., 639 F.2d 1344, 1347 (5th Cir.) (information regarding existing wage rates for bargaining unit employees is not confidential), cert. denied, 454 U.S. 826, 102 S.Ct. 116, 70 L.Ed.2d 100 (1981).

In the instant case, Lorimar has not established that either the capital budget or the individual employment agreements and grievance settlements to which the estimators have access establish the precise labor rates which Lorimar would accept in future labor agreements. Instead, Lorimar argues that the estimators’ access to such information enables them to predict potentially acceptable future labor rates. If we were.to accept Lorimar’s argument, virtually every employee with access to information concerning company income, expenses, or past and present labor costs would be a confidential employee because the information could be used to predict the company’s future bargaining position. As we made clear in Union Oil, supra, this is not the result contemplated by the Pullman Standard test.

The Board’s factual finding that Lori-mar’s estimators are not confidential employees is supported by substantial evidence in the record. Because the Board correctly applied the law to its findings in determining that the estimators should be included within the bargaining unit, we deny Lorimar’s cross-petition for review of the Board’s unit determination.

Ill

CONDUCT OF THE REPRESENTATION HEARING

Lorimar also argues that the Board erred in certifying a unit of estimators upon a ballot count obtained in an election in which voters were told that they were electing a representative for a unit which included both estimators and production coordinators. Because the scope of the unit is crucial to an employee’s vote in a certification election, Lorimar- asserts that the Board should have either stayed the election pending its decision on review of the composition of the unit, or informed the voters of the two possible bargaining units and have them cast two ballots.

The Board has broad discretion to, establish the procedure and safeguards necessary in conducting representation elections to insure the fair and free choice of bargaining representatives contemplated by the NLRA. NLRB v. A.J. Tower Co., 329 U.S. 324, 330, 67 S.Ct. 324, 327, 91 L.Ed. 322 (1946); see also NLRB v. Sonoma Vineyards, Inc., 727 F.2d 860, 863 (9th Cir.), cert. denied, — U.S. ---, 105 S.Ct. 130, 83 L.Ed.2d 71 (1984). (Board has broad discretion in conducting and supervising representation elections). Nevertheless, we have a responsibility to function as more than a mere “rubber stamp” for the. Board’s decisions. NLRB v. Chatfield-Anderson Co., Inc., 606 F.2d 266, 268 (9th Cir.1979). An election will be set aside if the election process is “significantly impaired” by the defect. Summa Corp. v. NLRB, 625 F.2d 293, 295 (9th Cir.1980) (quoting NLRB v. Health Tec Division/San Francisco, 566 F.2d 1367, 1372 (9th Cir.), cert. denied, 439 U.S. 832, 99 S.Ct. 110, 58 L.Ed.2d 127 (1978)).

The Board asserts that Lorimar’s failure to raise its objection prior to the election by requesting a stay of the election pursuant to section 102.67(b) of the Board’s Rules and Regulations resulted in a forfeiture of Lorimar’s right to challenge the election procedure employed by the Board. We disagree. Section 102.67(b) provides, in relevant part, as follows:

The filing of such a request [for review of the Regional Director’s decision] shall not, unless otherwise ordered by the Board, operate as a stay of the election or any other action taken or directed by the regional director: Provided, however, That if a pending request for review has not been ruled upon or has been granted ballots whose validity might be affected by the final Board decision shall be segregated in an appropriate manner, and all ballots shall be impounded and remain unopened pending such decision.

29 C.F.R. § 102.67(b) (1984). Nothing in this section indicates that a party must seek a stay of election in order to preserve its right to object to an election.

Moreover, Lorimar had no basis for an objection until the Board issued its decision on review excluding the production coordinators from the unit. See Hamilton Test Systems v. NLRB, 743 F.2d 136, 140 (2d Cir.1984) (grounds for objection to election procedure arose only when Board, months after the election, decided to reshape the bargaining unit presented to the voters). Furthermore, Lorimar did not receive notification of the Board’s decision to grant Lorimar’s petition for review in part until the day of the election. Therefore, as a practical matter Lorimar had no time to request a stay of election. Lorimar filed timely post-election objections to the conduct of the election which raised this issue. Therefore, Lorimar’s challenge to the election procedure is properly before us.

Lorimar contends that the Board’s application of the ballot impound procedure specified in section 102.67(b) to the instant case is inconsistent with the purposes of the NLRA because it denied the employees their right to choose freely a collective bargaining representative. Lorimar relies upon a recent Second Circuit case, Hamilton Test Systems, Inc. v. NLRB, supra, which we find factually indistinguishable from the instant case. In Hamilton, the Board initially certified a unit of 31 employees. Both the union and the company sought review of the Board’s decision. On the day before the election, the Board notified the Regional Director by telephone that it was granting the union’s request for review. Nevertheless, the Board conducted an election based upon the 31-employee unit originally certified, and the ballots were impounded pursuant to Rule 102.-67(b). Following the Board’s subsequent certification of a 14-employee unit, the ballots cast by those in the smaller unit were counted. The tally was six in favor of union representation and four against.

The Second Circuit scrutinized section 102.67(b) and concluded that the Board’s application of the section effectively denied employees the right to make an informed choice in a representation election. Id. at 142. The court opined that although the rule properly serves its major purpose of eliminating meritless appeals filed to delay the conduct of an election which involve only the inclusion or exclusion of a few voters, its application to a meritorious challenge which could significantly alter the scope of the unit violates the NLRA because it misleads the employees on a critical fact. Id. at 140. The court summarized:

We do not believe that the regulation provides the Board with the authority to inform employees that they are voting for representation in a broad facility-wide unit and later to consider the ballot as a vote for representation in a unit that is less than half the size and considerably different in character.

We agree with the Second Circuit’s analysis. The ballot impound procedure set forth in Rule 102.67(b) was recommended by the Chairman’s Task Force on the NLRB. See Chairman’s Task Force on the NLRB, Interim Report and Recommendations 13 (1976) (unpublished report) (hereinafter Task Force Report). In the context of a disputed unit determination, however, the Task Force report recommended . only that the Board

develop a balloting process under which the election procedure could be held, whatever the eventual decision might be on the appropriate unit. An analogue is the Globe [Globe Machine & Stamping Co., 3 N.L.R.B. 294 (1937) ] election procedure which has been used successfully since 1937____

Task Force Report at. 12. As the Hamilton court suggested, such a balloting process would be to inform the voters of the two possible bargaining units and have them cast two ballots, one for each unit. Hamilton, supra, at 141. All ballots could then be impounded pending the Board’s ultimate unit determination. Id.

The reference in the Task Force Report to the analogous Globe election procedure persuades us that the Task Force envisioned the procedure suggested by the Hamilton court. The Globe self-determination procedure permits employees to determine the scope of a unit by allowing them to cast a vote for each of several potential units which the Board has determined are appropriate. We have approved the Globe procedure as consistent with the purposes of the NLRA. Pacific Southwest Airlines v. NLRB, supra, at 1038-39 n. 10.

Adoption of a similar procedure in the context of a pending challenge to the scope of a unit would avoid delay in the election process while at the same time preserving the employees’ right to cast informed votes. As Congress recognized, delays in the election process should be avoided because they tend to undermine a union’s election campaign by halting its momentum. Boire v. Greyhound Corp., 376 U.S. 473, 478, 84 S.Ct. 894, 897, 11 L.Ed.2d 849 (1964) (quoting from H.R.Rep. No. 972, 74th Cong., 1st Sess. 5). The Task Force Report emphasized the need to avoid delays in the precise situation before us — where the Board has granted a request for review of a regional director’s pre-election ruling. Task Force Report 7-8 (“if there are pending issues which could affect the validity of the election, they should be resolved after the election has been held”) (emphasis in original).

Nevertheless, it is at least of equal importance that employees be afforded the opportunity to cast informed votes on the unit certified. The procedure followed by the Board in the instant case significantly impaired the conduct of the election by misleading the voters as to the scope of the unit, an issue which is central to the voters’ ability to cast an intelligent, voluntary ballot. The ultimate unit certified by the Board (eleven estimators) differed substantially in size and nature from the unit voted upon (seventeen employees, including estimators and production coordinators). The vote was so close that the union would have lost had one employee voted differently. As the Second Circuit pointed out, the estimators might have voted differently had they known the composition of the ultimate unit because (1) they might have believed that the smaller bargaining unit would provide insufficient support to justify union representation; (2) the Board’s unit determination split the work force, and the estimators could have believed that partial representation would have a divisive effect; or (3) an individual estimator’s interpersonal relationships within the company might have changed his vote on a smaller unit. See Hamilton, supra, at 141.

The Board argues that delay in the election process would be an inevitable consequence of conducting a Globe-type election. The Board asserts that, as a practical matter, it would be impossible to prepare additional ballots in the time between notification that the regional director has granted a request for review and the election itself. In the present case, however, it is difficult to see how preparation of an additional eleven ballots could constitute an insurmountable barrier which would justify allowing employees to cast uninformed votes. Further, we are persuaded that the additional time required to explain the Globe procedure and its purpose to the voting employees would be well spent. Under the unique facts presented in this record, whatever practical burdens performance of these obligations impose upon the Board are, in our view, outweighed by the need to insure an informed and therefore meaningful vote.

Therefore, we hold that the Board’s failure to collect two ballots from each voter, one on each potential unit, effectively deprived the employees of their right to cast a vote for representation in the unit ultimately certified by the Board. Lorimar’s cross-petition for review on this ground is granted, and the Board’s application for enforcement of its bargaining order is denied.² The case is remanded to the Board for the conduct of a new representation election.³

PETITION FOR ENFORCEMENT DENIED; CROSS-PETITION FOR REVIEW GRANTED IN PART.

1 . Lorimar’s unit production managers are managers within the meaning of the NLRA who formulate, determine, and effectuate management policies in the labor relations area. Lorimar Productions, Inc., 257 N.L.R.B. 1138, 1138 (1981).

2 . Lorimar also argues that because the Board’s application of Rule 102.67(b) deprives the employees of crucial procedural protections guaranteed by the NLRA, the NLRA-imposed exclusive representation rule (i.e., that a union is the exclusive bargaining agent for all employees within a unit once the majority of the employees in the unit agree to representation) violates the employees’ First Amendment freedom of association rights and Fifth Amendment due process rights. Because we conclude that the election procedures followed by the Board violated the NLRA, we need not reach the constitutional issues raised by this case. See Gulf Oil Co. v. Bernard, 452 U.S. 89, 99, 101 S.Ct. 2193, 2199, 68 L.Ed.2d 693 (1981) (prior to reaching any constitutional questions, federal courts must consider nonconstitutional grounds for decision).

3 . Remand for a new election is appropriate despite the passage of time and accompanying employee turnover. New employees are presumed to support the union in the same ratio as their predecessors, and elections are the preferred method for ascertaining employee sentiment. NLRB v. Western Drug, 600 F.2d 1324, 1326 (9th Cir.1979).