National Labor Relations Board v. National Car Rental System, Inc.

672 F.2d 1182, 109 L.R.R.M. (BNA) 2832, 1982 U.S. App. LEXIS 21672

• Court: Court of Appeals for the Third Circuit
• Decided: February 18, 1982
• Docket: 81-1180
• Status: Published

Opinions

OPINION OF THE COURT

SEITZ, Chief Judge.

The National Labor Relations Board (Board) applies for enforcement of an order directing National Car Rental System, Inc., to cease and desist from restraining or coercing employees in the exercise of rights protected by section 7 of the National Labor Relations Act, 29 U.S.C. § 157 (1976), and to take certain actions to remedy National’s violations of the Act. This court has jurisdiction under 29 U.S.C. § 160(e) (1976).

I.

For more than ten years National operated a truck leasing and renting facility in Newark, New Jersey. A unit of mechanics and garagemen, represented by Local Union 723, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, staffed the facility. Because of limitations on the physical plant at Newark, National began in 1975 to look for a second New Jersey facility. In early 1977, National located a site in Edison, New Jersey, twenty miles southwest of the Newark location.

In June 1977, at National’s corporate headquarters in Minneapolis, there was a meeting of its Newark manager, its general manager, and its director of truck operations. They discussed staffing at Edison, which was to be operated as a satellite of the Newark facility. National’s Newark manager recommended a slight reduction in the number of rental and lease trucks that would operate out of Newark, proposed the number of vehicles that should be obtained to operate out of Edison, and recommended the transfer of several unit and nonunit employees from Newark to Edison. Most of the Newark manager’s suggestions were approved, but National’s general manager did not approve the transfer of unit employees to Edison, stating that National’s president did not want a union at Edison.

National originally planned to open the Edison facility in the summer of 1977, but delays pushed back the opening date. In late 1977, a representative of another truck leasing corporation inquired about the possibility of purchasing some of the lease accounts that National serviced at the Newark facility. National received two other inquiries, including one from Champion Truck Rentals, Inc., on January 12, 1978. Champion offered to purchase all the Newark accounts and lease trucks, an offer that National seriously considered because the Newark operation had been steadily losing money. By the beginning of February, National expected to sell most of the Newark accounts and lease trucks. Champion submitted a written sales agreement on February 17, which National accepted and signed on February 22. The agreement provided that Champion would sublease the Newark facility beginning February 26, and purchase 22 of the 26 lease accounts and most of the lease trucks. The agreement also provided that National would discharge or reassign all its Newark employees before February 26.

On February 22, National told four non-unit employees who worked at Newark that they were to be transferred to Edison. The next day, Newark manager Monusky called a meeting of the thirteen members of Local 723 and told them that they would be discharged three days later. Some of the employees asked about being transferred to Edison, but Monusky replied that such a transfer would be impossible. National also discharged three nonunit employees as of February 25.

Some employees and Local 723 president Sal Zingone knew before February 22 that changes were in the air. First, employees had told Zingone of rumors of the opening of the Edison facility some months earlier. They told him it would be nonunion. Second, near the end of December 1977, the Newark manager told Zingone that National was considering a move, possibly to Edison. No details were discussed. Third, the Newark service manager warned some employees in December and January that their jobs were in danger. Fourth, a representative of Champion talked to some employees in late January and early February about working for Champion. Indeed, in early February the Champion representative offered mechanic Clifton Beard a job.

Zingone was not formally notified of National’s move to Edison until February 22, when National’s vice president for personnel and labor relations, Kenneth Sanville, called Zingone and told him that National was closing the Newark facility, and that all the union members would be discharged. Zingone said he wanted to check whether National’s action was legal. He said nothing about the possibility of bargaining. Zingone called Sanville the next day, said he thought that National had acted illegally, and that he would file unfair labor practice charges. Again bargaining was not discussed. Later that day, Zingone filed an unfair labor practice charge against National.

On February 26, National ceased to operate the Newark facility, and opened the Edison facility. It had seven employees, three of whom were garagemen or mechanics. None was a member of Local 723 or any other union.

A month later Local 723 filed a second unfair labor practice charge that in substance made the same allegations as the one filed February 23. The Board’s regional director issued a complaint charging that National violated section 8(a)(1), (3) & (5) of the Act. 29 U.S.C. § 158(a)(1), (3) & (5) (1976). After a hearing, an administrative law judge (ALJ) issued an opinion finding that National had violated section 8(a)(1) & (3), but not section 8(a)(5), and recommended an appropriate remedial order. The Board affirmed the ALJ’s finding of a section 8(a)(1) & (3) violation, and also found that National had violated section 8(a)(1) & (5) by refusing to bargain over the effects of its move. The Board modified the recommended order accordingly. National Car Rental System, Inc., 252 N.L.R.B. 159 (1980). The Board has applied for. enforcement of its order.

II.

The Board makes three arguments in this court: (1) that the finding of a section 8(a)(1) & (3) violation is supported by substantial evidence; (2) that the finding of a section 8(a)(1) & (5) violation is supported by substantial evidence; and (3) that the Board’s order was an appropriate exercise of its remedial discretion. We consider these issues in turn.

A.

This court must accept as conclusive findings of the Board that are supported by substantial evidence considered on the record as a whole. See Universal Camera Corp. v. NLRB, 340 U.S. 474, 487-91, 71 S.Ct. 456, 463-66, 95 L.Ed. 456 (1951).

To find a violation of section 8(a)(3), which states that “[i]t shall be an unfair labor practice for an employer ... by discrimination in regard to hire or tenure of employment ... to encourage or discourage membership in any labor organization,” the Board must first find that National engaged in conduct in the staffing of the Edison facility that discriminated against union members in a way that could have adversely affected their employee rights. Second, that discriminatory conduct constitutes an unfair labor practice if it meets the standards set forth in NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 34, 87 S.Ct. 1792, 1798, 18 L.Ed.2d 1027 (1967) (emphasis in original):

First, if it can reasonably be concluded that the employer’s discriminatory conduct was “inherently destructive” of important employee rights, no proof of an antiunion motivation is needed and the Board can find an unfair labor practice even if the employer introduces evidence that the conduct was motivated by business considerations. Second, if the adverse effect of the discriminatory conduct on employee rights is “comparatively slight,” an antiunion motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct.

First, we examine whether substantial evidence supports the Board’s finding that National refused to consider the Newark union members for hire at Edison. When, on February 23, the employees found out they were being let go, Newark manager Monusky told the employees who inquired about the possibility of transfer to Edison that they would not be considered. Monusky testified, “I informed [the union employees] that we were going down to Edison.” After being asked whether any of the employees had responded to this statement, Monusky answered, “[h]aving them all in my office, as I said, I know some of them inquired about the Edison facility and the possibility of going down to Edison.” Monusky further testified that he responded to their inquiries: “I said to them unfortunately there was nothing I could do for them, and that as of three days they would be terminated.” Employee Beard testified that the men “asked [Monusky] if they were going to take any of them down there [to Edison], and [Monusky] said no, they weren’t going to take any of them, and they asked why.” We conclude that substantial evidence supports the finding that National refused to consider the Newark union members for hire at Edison.

National claims the testimony of Monusky and Beard was inadmissible hearsay. Hearings before the Board must comply with the Federal Rules of Evidence “so far as practicable.” 29 U.S.C. § 160(b) (1976). Hearsay is defined as “a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” Fed.R.Evid. 801(c).

The statements of Monusky and Beard, however, were not offered to prove that any employees wanted to transfer to Edison. They were offered to show that employees asked about transferring. The significance of the statements the employees made “lies solely in the fact that [they] were made, [and] no issue is raised as to the truth of anything asserted.” Notes of Advisory Committee on Proposed Rules, Note to Subdivision (c) of Rule 801, reprinted in 28 U.S.C. Appendix (1976). The truth of their statements does not depend at all on “the veracity of the out-of-court declarant.” C. McCormick, Handbook of the Law of Evidence § 249, at 588 (E. Cleary ed. 1972). The testimony of Monusky and Beard about the employees’ statements was not hearsay, was not otherwise challenged, and therefore was properly admitted.

Second, we examine whether the discriminatory conduct meets the Great Dane test. National argues that its conduct was neither inherently destructive nor motivated by antiunion animus, as required by Great Dane, and that there was a legitimate business justification for its conduct. The Board, relying on Allied Mills, Inc., 218 N.L.R.B. 281, 288-89 (1975) (refusal to allow employees opportunity to transfer is inherently destructive in some circumstances), enf’d, 543 F.2d 417 (D.C.Cir.1976), cert. denied, 431 U.S. 937, 97 S.Ct. 2648, 53 L.Ed.2d 254 (1977), argues that National’s conduct was inherently destructive, and that, in any event, there was substantial evidence of antiunion animus.

We need not address the question whether National’s conduct was inherently destructive because we think that the following facts constitute the requisite substantial evidence of antiunion animus: (1) National planned from the start to make Edison a nonunion facility; and (2) National did not change this plan after it decided to close the Newark facility. National does not dispute the truth of these facts, but argues that they are not relevant, because it believed that Champion would hire all of its Newark garagemen and mechanics. Champion in fact hired four of them to start work on February 27. National also relies on its harmonious relationship with Local 723 during the entire time that National operated the Newark facility. We believe, however, that the evidence substantially supports the Board’s finding that, after the sale of most of the Newark accounts became likely, National flatly refused to consider the transfer of the unionized Newark employees. In conjunction with the numerous earlier expressions that Edison would be nonunion, this is substantial evidence of antiunion animus.

Thus, we conclude that substantial evidence supports the Board’s finding that the refusal to consider the Newark employees for transfer violated section 8(a)(1) & (3).

B.

The ALJ found that National did not violate section 8(a)(1) & (5) by failing to bargain over, first, the decision to sell most of the Newark accounts and to close the Newark facility; second, the decision to open the Edison facility and to transfer some Newark accounts there; and third, the effects of these two decisions. The Board affirmed the first two findings, but not the third. It found that the failure to bargain over the effects of the relocation violated section 8(a)(1) & (5). National challenges this finding. Here, too, our review is limited to deciding whether there is substantial evidence on the record considered as a whole to support the Board’s finding.

Section 8(a)(5) provides that, “[i]t shall be an unfair labor practice for an employer ... to refuse to bargain collectively with the representatives of his employees... . ” The parties do not dispute that National had a duty to bargain over the effects of its decision to relocate. See, e.g., First National Maintenance Corp. v. NLRB, 452 U.S. 666, 677 n.15, 101 S.Ct. 2573, 2580 n.15, 69 L.Ed.2d 318 (1981), Electrical Products Division of Midland-Ross Corp. v. NLRB, 617 F.2d 977, 983 (3d Cir.), cert. denied, 449 U.S. 871, 101 S.Ct. 210, 66 L.Ed.2d 91 (1980). One of the effects over which there was a duty to bargain was whether National would transfer any of Newark’s employees to Edison. See Fraser & Johnston Co. v. NLRB, 469 F.2d 1259, 1262-63 (9th Cir. 1972).

The parties’ arguments center around two interrelated issues: (1) whether Local 723 waived its right to bargain about effects, and (2) whether National notified Local 723 of the decision to relocate at a time and in such a manner that Local 723 could have requested bargaining. The ALJ found that Local 723 waived its right. The Board found that National announced its decision to relocate in such a manner that any request for bargaining would have been futile.

National argues that one basis for finding a waiver of the right to bargain over effects was that Local 723 and the employees had known for months that some changes were in the offing. The ALJ relied in part on this prior knowledge: “Zingone had actual notice in late December that [National] was contemplating a move from Newark .... [A] request to bargain over effects as well as the decision to relocate would have been appropriate at that time.” 252 N.L.R.B. at 173. The Board, however, discounted the effect of any notice that Local 723 or the employees had before February 22. “[P]lant gossip, conjecture and rumors cannot take the place of formal notice when notice is required.” NLRB v. Royal Plating & Polishing Co., 350 F.2d 191, 195 (3d Cir. 1965). Accord, International Ladies’ Garment Workers Union v. NLRB, 463 F.2d 907, 918 (D.C.Cir.1972); NLRB v. Rapid Bindery, Inc., 293 F.2d 170, 176 (2d Cir. 1961). We think the Board was justified in concluding on this record that there was no legally sufficient notice before vice president Sanville’s phone call to Zingone on February 22.

The ALJ’s second basis for finding a waiver was Zingo'ne's failure to request bargaining over effects when he received the February 22 phone call from Sanville. The Board stated that there was no waiver because

[Local 723] immediately contested the propriety of [National’s] precipitous announcement that all unit employees were being terminated, but was told that it had no control in the situation. Had [National] not announced the closing and terminations as a fait accompli, it is clear [Local 723] could have offered various proposals, such as transferring the unit employees to Edison. [National’s] announcement, however, precluded such a request and clearly indicated that any attempt at bargaining would have been futile.

252 N.L.R.B. at 163. National was under no obligation to seek out the bargaining representative. See NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292, 297, 59 S.Ct. 501, 504, 83 L.Ed. 660 (1939). The Board concedes that Local 723 made no request. Thus, National cannot have violated the duty to bargain unless the notice of its plan to relocate was presented to Zingone in such a manner that the notice itself showed a violation.

National argues that the Board did not apply the correct principles in concluding that there was no waiver. The Board stated that there was no waiver by Local 723 because National “announced the closing and terminations as a fait accompli.” Despite this imprecise language, the Board clearly held that the decision to close the Newark facility was a decision about which National was under no duty to bargain with Local 723. See 252 N.L.R.B. at 162-63. The Board was correct. See First National Maintenance Corp., 101 S.Ct. at 2584. National could announce the Newark closing after the decision had already been made.

We also agree with the Board that National’s announcement of employee terminations without any reasonable opportunity to bargain about the decision was impermissible. The Supreme Court recently stated:

There is no dispute that the union must be given a significant opportunity to bargain about these matters of job security as part of the “effects” bargaining mandated by § 8(a)(5). And, under § 8(a)(5), [such bargaining] must be conducted in a meaningful manner and at a meaningful time, and the Board may impose sanctions to insure its adequacy.

Id. at 2582 (citations omitted).

We find substantial evidence to support the Board’s finding that the termination of the employees was announced as a fait accompli. The record shows that at the time National announced the closing Local 723 reasonably understood that a request to bargain over matters of job security would be futile. Cf. ABC Trans-National Transport, Inc. v. NLRB, 642 F.2d 675, 678-79 n.6 (3d Cir. 1981) (implicitly overruled on other grounds in First National Maintenance, supra) (“We find it difficult to understand how the union can be regarded as having waived the right to request bargaining over a decision which had been announced as final.”).

Zingone presented evidence in his testimony that:

[Sanville] told me that the Newark location was going to close down, and all the people will be terminated, and given whatever compensation they had coming to them.

[When Zingone called back on February 23 to protest National’s decision, San-ville’s response was] that I should do whatever I had to do, and that perhaps the best thing to do is have the legal departments of both his company and our local tangle [about] that themselves.

Zingone’s testimony supports the conclusion that Sanville presented the news of the closing of Newark and of the terminations of the employees in a manner that precluded bargaining, and would have made any request futile.

There is also the following evidence that would support a conclusion that National’s decision to terminate the employees had been finally made before it announced the closing. National’s vice president Sanville testified that as of February 22:

Q: And the decision not to offer these employees the opportunity to transfer had already been made; hadn’t it?

A: That is correct.

A: Again, I told [Monusky] I would — I advised him to bring each employee into his office, explain the circumstances behind the shutdown, give them a letter so that it would ease their applying for unemployment compensation.

Sanville’s testimony amply supports the Board’s conclusion that, at the time he called Local 723 president Zingone on February 22, National had already decided not to bargain about whether the employees could transfer to Edison. Sanville also testified that he thought that at the time he made this phone call some of the mechanics who would work at Edison had already been hired.

We realize that there is evidence in the record that would support the conclusion that National did not foreclose effects bargaining. The testimony about the conversations between Sanville and Zingone could be interpreted more favorably to National. It may be inferred from the AU’s discussion of whether Local 723 waived its right to bargain over effects that the ALJ did not find National’s notice to be a fait accompli. However, because the ALJ’s apparent finding was colored by his belief that Local 723 should have requested bargaining as early as December 1977, we do not believe that it detracts seriously from the substantiality of the evidence supporting the Board’s conclusion. Cf. Eastern Engineering & Elevator Co. v. NLRB, 637 F.2d 191, 197-98 (3d Cir. 1980) (discussion of effect of conflict between ALJ and Board on findings of fact that depend on credibility and demeanor of witnesses). Thus, although the issue would be a difficult one if we had to make the initial findings of fact, we think that there is substantial evidence to support the Board’s finding of a section 8(a)(1) & (5) violation.

C.

The Board, after finding the violations of section 8(a)(1), (3) & (5), issued an order requiring that National cease and desist from refusing to bargain in good faith with Local 723 about the effects of National’s sale of accounts and relocation, and from refusing to consider the thirteen Newark employees for hire at Edison because of their membership in Local 723. The order also required National to offer employment at Edison to the thirteen Newark employees, dismiss any current employees if necessary to make jobs available, and pay for any lost earnings caused by the discrimination. National does not challenge these portions of the order. However, it does challenge two additional requirements of the order: (1) that it recognize Local 723 as the exclusive bargaining representative of the garagemen and mechanics at Edison; and (2) that it provide additional backpay in the amount of the employees’ normal wages from five days after the Board’s decision until National offers to bargain, except that each employee is to receive a minimum of two weeks wages. National argues that these two parts of the order are beyond the broad remedial power that section 10(c) of the Act, 29 U.S.C. § 160(c) (1976), grants to the Board, and therefore constitute an abuse of discretion, see Detroit Edison Co. v. NLRB, 440 U.S. 301, 316-17, 99 S.Ct. 1123, 1131-32, 59 L.Ed.2d 333 (1979).

1. The Recognition and Bargaining Order

The Board reasoned that National should be required to recognize Local 723 as the exclusive bargaining representative of the garagemen and mechanics at Edison because the Edison facility represented a continuation of the operation at the Newark facility.

While no employees from Newark actually transferred to Edison [when it opened], this result stems directly from [National’s] systematic discrimination against the Newark employees. Although the record does not indicate the number of employees who would have been willing to transfer, it does show that several of the 13 unit employees from Newark attempted to do so upon notification of their termination, and that others who testified also indicated their desire to accept employment at Edison.... [A] fair inference to be drawn from these facts is that, absent [National’s] discrimination, [Local 723] would have retained its majority among [National’s] employees....

252 N.L.R.B. at 164. Thus, it is clear that the Board imposed the bargaining order to provide a complete remedy for the section 8(a)(3) violation.

National vigorously opposes the requirement of recognition. Even if we assume that the Board sufficiently articulated its reasons for imposing a bargaining order, and that there is substantial evidence to support the Board’s finding that Local 723 would have retained its majority at the Edison facility but for National’s unfair labor practice, we think that the imposition of a bargaining order at this point is an abuse of discretion. It is at least premature in view of the fact that the remedial order requires that the thirteen former employees be offered employment at Edison on a seniority basis. If acceptance of this unchallenged remedy should result in a union majority at Edison, there is no evidence that National would not recognize Local 723 as the exclusive bargaining representative for the Edison garagemen and mechanics. It is also possible that the former employees of the Newark facility will not constitute a majority at Edison, even after the other aspects of the Board’s remedial order are enforced. Employees not only have the right to bargain collectively, but also to refrain from collective bargaining. See 29 U.S.C. § 157 (1976). Thus, the Board’s order in this case may impose a bargaining representative on employees who do not wish to be represented. See Peoples Gas System, Inc. v. NLRB, 629 F.2d 35, 45 n.17 (D.C.Cir.1980) (similar order would probably result in union representation for at least four years).

The Board did not explicitly consider the possibility that its order might impose a bargaining representative on employees who do not wish one. The Board reasoned that, absent National’s unfair labor practices, a majority of the Edison employees would have wanted Local 723 to represent them. Not to impose Local 723 as their representative now “would provide [National] with an impermissible windfall.” 252 N.L.R.B. at 164 n.26. However, the Board failed to recognize the injustice in imposing a bargaining representative on employees who are perfectly able to decide whether they want one. Here, the present employees are innocent of any wrongdoing, and some or all of them may lose their jobs because of other aspects of the Board’s order. We think the injury that might be done to the rights of the current Edison employees by imposing on them a union they may not want is much greater than the injury that will be done by allowing the possibility that National will avoid a unionized work force. See Fraser & Johnston Co. v. NLRB, 469 F.2d 1259, 1265 (9th Cir. 1972) (section 8(a)(5) case). Cf. Peoples Gas System, 629 F.2d at 45-51 (refusing to enforce recognition and bargaining order after balancing rights of employees against a windfall to the employer). But cf. Air Express International Corp. v. NLRB, 659 F.2d 610, 617 (5th Cir. 1981) (Board’s bargaining order enforced where employer merged and relocated, and discriminatorily discharged employees because of their membership in newly certified union).

Given the other remedial provisions, we conclude that at this stage the Board’s recognition and bargaining order constituted an abuse of its discretion.

2. The Effects Bargaining Order

The Board reasoned that National’s section 8(a)(5) violation in refusing to bargain about the effects of the Newark facility’s closing would go unremedied unless an order to bargain over effects was accompanied by the restoration of “some measure of economic strength” to the former Newark employees. 252 N.L.R.B. at 164. The Board’s complicated remedy essentially gave each of the thirteen at least two weeks of pay, with the possibility of increased compensation if National continued to refuse to bargain.

National claims this remedy is punitive rather than remedial because the order already provides for the recovery of any lost wages. We do not agree that this makes the Board’s order punitive. The backpay was provided to remedy the section 8(a)(3) violation. The two weeks’ wages were intended to remedy the section 8(a)(5) violation. We think the Board did not abuse its discretion in concluding that a monetary award to the employees was necessary to remedy the section 8(a)(5) violation. We do not think that the compensation is punitive simply because the Board defined the monetary award in terms of the employees’ former salaries. Each of the section 8(a)(3) and section 8(a)(5) awards would be within the Board’s discretion if made singly, the two violations are separate and distinct, and there is nothing punitive in remedying both violations.

The Board did not abuse its discretion in remedying the section 8(a)(5) violation.

3. Compliance

National also argues that it has complied with the Board’s order and that Local 723 has not requested bargaining over the effects of closing. Even assuming this is true, it does not affect our consideration of whether to enforce the Board’s order. See NLRB v. Mexia Textile Mills, Inc., 339 U.S. 563, 567, 70 S.Ct. 826, 828, 94 L.Ed. 1067 (1950). Any issues about compliance with the Board’s order may be litigated, if necessary, in further proceedings.

III.

The Board’s order, as modified, will be enforced.