Schmerler Ford, Inc. v. National Labor Relations Board

424 F.2d 1335, 73 L.R.R.M. (BNA) 2945, 1970 U.S. App. LEXIS 9910, 1970 Trade Cas. (CCH) 73,131

• Court: Court of Appeals for the Seventh Circuit
• Decided: April 8, 1970
• Docket: 17659
• Status: Published

Opinions

CUMMINGS, Circuit Judge.

This petition is to review an order of the National Labor Relations Board concluding that petitioners each committed an unfair labor practice by refusing to bargain collectively with the American Federation of Professional Salesmen (the “Union”), in violation of Sections 8(a) (1) and 8(a) (5) of the National Labor Relations Act (29 U.S.C. §§ 158(a) (1) and 158(a) (5)).

Petitioners are 24 automobile dealers in the metropolitan Chicago area. In 1968, pursuant to Section 9(c) of the Act (29 U.S.C. § 159(c)), the Union filed petitions seeking to represent the salesmen at each of these automobile dealers. In April and May 1968, following hearings before a hearing officer of the Board, the Regional Director ordered elections to be held among the employees after finding that the Union was a labor organization within the meaning of Section 2(5) of the Act (29 U.S.C. § 152(5)).

Petitioner automobile dealers requested the Regional Director to dismiss the Union’s petitions for representation on the ground that the Union was conspiring to violate the Sherman Act. The dealers showed that they had received letters of demand for recognition from the Union in January and February 1968, in which the Union stated that its proposed collective bargaining agreement “could guarantee you, and all the dealers in the area, a minimum net profit (I repeat NET) equal to 3% of the list price of the unit [automobile].” This language was omitted from subsequent demand letters. In literature distributed to various automobile salesmen, the Union stated they should join “[t]o put your employer back into the retail business by guaranteeing him a net profit, after all expenses are paid, equal to 3% of the list price.” The Union discussed its possible pricing formula at an organizing meeting on January 28, 1968, giving the following example for a car invoiced by the factory to the dealer at $3,120:

“To this invoice of $3120 we would add one quarter of one per cent for our health and welfare program, which is $10. We would add another one quarter of one per cent for our retirement program, which is another $10. We would add 4Y2 per cent as the sales commission, which is $180. We would add 2 per cent for the service, get-ready, advertising, and office expense of the dealer, which is $80. We could then guarantee the dealer a minimum profit equal to 3 per cent of the list price of the car, which is $120.

“We could guarantee this and we would guarantee it by Article 8, which is the one I didn’t read before.

“Article 8 of our [collective bargaining] agreement would read as follows:

‘Salesmen will not be required to sell a new motor vehicle at a price less than 12 per cent off the list price less transportation and delivery of the motor vehicle. We take the 12 per cent off and we are right down to this figure of $3520’.”

In denying the dealers’ motions to dismiss the petitions for representation, the Regional Director stated that it was speculative whether the Union, if selected as the salesmen’s bargaining representative, would actually seek to incorporate this pricing formula into a collective bargaining agreement. He concluded that since the Union qualified as a labor organization within the meaning of Section 2(5) of the Act, the Board should process the representation petitions. He did not indicate, however, that the Union’s proposal was valid under the Sherman Act.

The antitrust issue was again raised in the dealers’ petitions to review the Regional Director’s order, but the Board concluded that these petitions raised no substantial issues warranting review and therefore denied them. In the ensuing elections, the Union received a majority of the ballots counted and was certified as the exclusive bargaining representative of petitioners’ salesmen.

As the certifications issued, the Union requested the dealers to commence negotiations for a collective bargaining contract, but its communications were unanswered. Therefore,- the Union filed charges with the Board alleging that petitioners each committed an unfair labor practice by refusing to recognize it and bargain collectively with it. In November 1968, a trial examiner conducted a hearing with respect to the unfair labor practice alleged in the complaints filed by the Board’s general counsel. In their answers the petitioners denied that the Union was a labor organization within the meaning of Section 2(5) of the Act and asserted that its certification was invalid, primarily because of its price-fixing program. The trial examiner rejected these contentions. As to whatever collective bargaining agreement the Union might propose, the trial examiner stated “the Employer could dispose by saying nay to price fixing and aye to working terms and conditions.” He also noted that the Board had already rejected the dealers’ price-fixing contention in the representation proceedings. The findings, conclusions and ' recommendations of the trial examiner were adopted by the Board, and it simultaneously overruled the dealers’ exceptions. Consequently, the dealers were ordered to cease and desist from the unfair labor practices found, to bargain collectively with the Union and to post the customary notices. 175 NLRB No. 90 (1969).

Absent an affirmative defense, petitioners’ adamant refusal to bargain collectively with the certified representative of their employees clearly violates Sections 8(a) (1) and 8(a) (5) (29 U. S.C. §§ 158(a) (1) and 158(a) (5)). Petitioners no longer contend that the Union is not a labor organization within the purview of Section 2(5) of the Act (29 U.S.C. § 152(5)). Rather, they present a dual attack — first against the validity of the Union’s election and then the propriety of granting recognition to the Union as bargaining representative in light of the proposed price-fixing scheme.

Initially, the Board objects that petitioners should be barred from challenging the election results because of their failure to file objections thereto within the five-day period required by the Board’s Rules and Regulations (Series 8, Section 102.69(a)). National Labor Relations Board v. Conlon Bros. Mfg. Co., 187 F.2d 329, 332-333 (7th Cir. 1951). In exceptional circumstances, however, this Court has considered objections to elections lodged after expiration of that period. National Labor Relations Board v. Fresh’nd-Aire Company, 226 F.2d 737, 741-742 (7th Cir. 1955). In this case, the dealers presented objections to the Regional Director and the Board prior to the representation election. Their failure to reassert their antitrust point in post-election proceedings until their answers to the unfair labor practice complaints should not preclude them from raising the same point in the unfair labor practice proceedings or before this Court. They may not, however, go beyond the issues thus raised and advance additional allegations and evidence pertinent to the representation proceedings. Rockwell Mfg. Co., Kearney Div. v. National Labor Relations Board, 330 F.2d 795, 797-798 (7th Cir. 1964), certiorari denied, 379 U.S. 890, 85 S.Ct. 161, 13 L.Ed.2d 94; see National Labor Relations Board v. Golden Age Beverage Company, 415 F.2d 26, 32-33 (5th Cir. 1969).

Within these confines we turn to consider the dealers’ arguments. They first contend that the election was invalid because the Union’s campaign propaganda contained descriptions of the pricing proposals which allegedly misled the employees and prevented a fair election. Even assuming that the proposals were actually illegal and persisted after the Union filed its request for an election, nothing in these proposals warrants setting aside the certification election as unfair as a matter of law.

The Board is not a censor over the campaign propaganda circulated by either union or management during a representation election. Linn v. United Plant Guard Workers, 383 U.S. 53, 60-61, 86 S.Ct. 657, 15 L.Ed.2d 582. Correction of deceptive or untruthful statements is left primarily to the participants themselves and the good sense of the voters. National Labor Relations Board v. Red Bird Foods, Inc., 399 F.2d 600, 602-603 (7th Cir. 1968); National Labor Relations Board v. Golden Age Beverage Company, 415 F.2d 26, 31 (5th Cir. 1969). The Board intercedes to set aside elections only when improper campaign tactics touch material matters and create a climate which thwarts the employees’ free choice and distorts the electoral process. Gallenkamp Stores Co. v. National Labor Relations Board, 402 F.2d 525, 533 (9th Cir. 1968); Aerovox Corp. of Myrtle Beach, S. C. v. National Labor Relations Board, 409 F.2d 1004, 1007 (4th Cir. 1969); Southwest Portland Cement Company v. National Labor Relations Board, 407 F.2d 131,134-135 (5th Cir. 1969).

In determining whether an election has been unfair, the accused conduct must be considered with reference to the “timing, proportion of employees affected, and the character” of the claimed coercive or misleading action. Rockwell Mfg. Co., Kearney Div. v. National Labor Relations Board, 330 F.2d 795, 797 (7th Cir. 1964), certiorari denied, 379 U.S. 890, 85 S.Ct. 161, 13 L.Ed.2d 94. In this ease, the dealers have not objected to a misrepresentation of fact or even of law. Their contentions pertain to certain of the Union’s proposals, assertedly illegal, which were advanced as potential elements of a collective bargaining agreement. There is no actual evidence of the prominence of the illegal proposals in the overall campaign of the Union or of the number of employees to whom these proposals were communicated. The record contains no indication how long these assertions persisted after the petitioners objected to the illegality of the scheme. There is no proof that the scheme won the election for the Union. There is no suggestion that the Union cynically suggested a pricing program which it considered illegal in the hope of misleading voters. Cf. United Electrical, Radio and Machine Workers v. National Labor Relations Board, 133 U.S.App.D.C. 115, 409 F.2d 150, 158-159 (1969). Long before the election, the dealers here were well aware of the propaganda proposals and were free to respond by pointing out any defects, legal or otherwise. National Labor Relations Board v. Red Bird Foods, Inc., 399 F.2d 600, 602-603 (7th Cir. 1968); National Labor Relations Board v. Golden Age Beverage Company, 415 F.2d 26, 31 (5th Cir. 1969). Effective rebuttal was not hampered by the legal, rather than factual, character of any dispute over the pricing program. Under these circumstances, we can only conclude that the petitioners have failed to satisfy their burden of proof in this Court that the representation election was unfair and the Board’s certification of the Union arbitrary. National Labor Relations Board v. Mattison Machine Works, 365 U.S. 123, 81 S.Ct. 434, 5 L.Ed.2d 455; Follett Corp. v. National Labor Relations Board, 397 F.2d 91 (7th Cir. 1968); Macomb Pottery Company v. National Labor Relations Board, 376 F.2d 450, 453 (7th Cir. 1967).

Apart from the election process itself, petitioners contend that the Union’s role in allegedly fostering an illegal price-fixing scheme renders it unfit to act as the bargaining agent of these employees and that the Board should deny recognition to the Union. Whether considered as a ground for denying a representation election¹ or as an independent justification for the refusal to bargain about wages and conditions of employment, we find this argument without merit.

The National Labor Relations Act was intended to encourage the formation and development of private means for the settlement of labor disputes through collective bargaining between management and the employees’ representative. 29 U.S.C. § 151. The Act establishes a strong public policy favoring the free choice of a bargaining agent by employees which should not lightly be frustrated. 29 U.S.C. §§ 151, 157; National Labor Relations Board v. David Buttrick Company, 399 F.2d 505, 507 (1st Cir. 1968).² Denial of recognition to the Union would run counter to these firmly established policies. It would not only nullify past efforts at organization, but it would also impede future effective exercise of the employees’ rights to organize and engage in concerted activities protected by Section 7 (29 U.S.C. § 157). It would foreclose not only a potentially illegal arrangement but also legitimate negotiation and settlement of disputes over wages and conditions of employment.

Neither public antitrust policy nor the proper interest of petitioners warrants this interference with bargaining. Antitrust enforcement does not call for the sweeping and drastic sanction of union nonrecognition. Cf. Leedom v. International Union, 352 U.S. 145, 150, 77 S.Ct. 154, 1 L.Ed.2d 201. The dealers are not compelled to enter into any agreement violative of the Sherman Act. Nor are they foreclosed from a timely presentation of the questions whether a price scheme constitutes a mandatory subject of bargaining and, if so, whether the particular scheme violates the antitrust laws.³ A decertification proceeding under Section 9(c) (29 U.S.C. § 159(c)) would also be available if it appears that a majority of the employees no longer support the Union at the end of the year. National Labor Relations Board v. Gissel Packing Co., 395 U.S. 575, 613, 89 S.Ct. 1918, 23 L.Ed.2d 547. These procedures adequately protect the dealers and public from a possibly illegal price-fixing scheme without the needless disruption of labor-management relations. Local 1976, Carpenters’ Union v. National Labor Relations Board, 357 U.S. 93, 108-111, 78 S.Ct. 1011, 2 L.Ed.2d 1186; cf. Southern S. S. Co. v. National Labor Relations Board, 316 U.S. 31, 47, 62 S.Ct. 886, 86 L.Ed. 1246; H. L. Washum, 172 NLRB No. 40, 61 et seq., 68 LRRM 1535, 1539-1541 (1968). The policy of the National Labor Relations Act favors a minimum of governmental interference and the Board is properly reluctant to intrude into the realm of union-management relations until necessary. Here petitioners refused to bargain on any subject before any proposal, legal or illegal, mandatory or permissive, had been presented by the Union. This refusal was precipitous and excessive. Minnesota Mining and Manufacturing Company v. National Labor Relations Board, 415 F.2d 174, 177-178 (8th Cir. 1969); General Electric Company v. National Labor Relations Board, 412 F.2d 512, 522-523 (2d Cir. 1969).

The petition for review is denied; enforcement of the order of the Board is granted.

1 . See Intertype Company v. National Labor Relations Board, 401 F.2d 41, 43 (4th Cir. 1968), certiorari denied, 393 U.S. 1049, 89 S.Ct. 686, 21 L.Ed.2d 691.

2 . Unlike the present case, those instances relied upon by petitioners in which the Board has denied recognition of the chosen union involved a conflict of interest or some other indication that the union could not fairly perform its fiduciary function as representative and bargaining agent of its members. See, e. g., Alaska Salmon Industry, 78 NLRB 185 (1948); American District Telegraph Co., 89 NLRB 1635 (1950); Bausch & Lomb Optical Co., 108 NLRB 1555 (1954); General Teamsters, Local 249, 139 NLRB 605 (1962); Iowa Packing Co., 125 NLRB 1408 (1959).

3 . Thus petitioners could themselves institute proceedings against the Union under Section 8(b) (3) (29 U.S.O. § 158(b) (3)) should they feel that the Union unfairly insists upon an unfair or illegal item in bargaining. Without expressing any opinion on the merits of the antitrust allegations, we note that the Board approved the trial examiner’s ruling that petitioners need not bargain on price-fixing.