409 F.2d 676 (2nd Cir. 1969), 339, Pepsi-Cola Buffalo Bottling Co. v. N. L. R. B.

Docket Nº:339, 340, 32417, 32418.
Citation:409 F.2d 676
Party Name:PEPSI-COLA BUFFALO BOTTLING COMPANY and Squirt-Vernors of Buffalo, Inc., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
Case Date:March 25, 1969
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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Page 676

409 F.2d 676 (2nd Cir. 1969)

PEPSI-COLA BUFFALO BOTTLING COMPANY and Squirt-Vernors of Buffalo, Inc., Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD, Respondent.

Nos. 339, 340, 32417, 32418.

United States Court of Appeals, Second Circuit.

March 25, 1969

Argued March 7, 1969.

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Victor C. Silverstein, Buffalo, N.Y., for petitioner.

Vivian Asplund, Washington, D.C. (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Assoc. Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Elliott Moore, Washington, D.C., on the brief), for respondent.

Before LUMBARD, Chief Judge, and SMITH and KAUFMAN, Circuit Judges.

IRVING R. KAUFMAN, Circuit Judge:

The National Labor Relations Board has adopted a 'rule against relitigation' which has the effect of denying to a litigant in an unfair labor practice action review by the Board of decisions made by a regional director in a prior representation proceeding, even if that prior decision is at the very heart of the unfair labor practice dispute. See 29 C.F.R. § 102.67. We find the Board's action pursuant to that rule unjustified in this case. Accordingly, the petition to set aside the Board's decision filed on May 2, 1968, is granted and the case is remanded to the Board for review.

I.

Pepsi-Cola Buffalo Bottling Company and Squirt-Vernors of Buffalo, Inc. (hereinafter referred to jointly as Pepsi-Cola or the Company) bottle and market soft drinks in the Buffalo area. The Company moves its products primarily through the services of 54 'distributors.' These distributors are individuals who each own or lease a single truck and alone, or in some instances with a helper, carry the soda to the retail stores which are Pepsi-Cola's customers. On February 15, 1967, the International Union of District 50, United Mine Workers of America (hereinafter the Union) filed

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with the Board a petition, subsequently amended on May 12, 1967, for certification as bargaining representative to negotiate with Pepsi-Cola for a unit which included the distributors, among others. The Company sought denial of certification insofar as it related to the distributors on the ground that they were independent contractors, not employees, and hence not properly includible in the bargaining unit. 1 See 29 U.S.C. § 152(3); N.L.R.B. v. United Insurance Co., 390 U.S. 254, 88 S.Ct. 988, 19 L.Ed.2d 1083 (1968). An inquiry into the dispute was conducted by a hearing officer. 2 On the basis of this examination, the Acting Regional Director for the Board's Third Region on August 9, 1967 concluded that the distributors were employees and therefore ordered an election in a bargaining unit consisting of the distributors and driver salesmen. In the extended history of this dispute, this was the only determination made on the merits of this crucial issue.

Pepsi-Cola petitioned the Board to review the Regional Director's decision. As required by the Board's rule, the request for review was in a 'self-contained' document 'enabling the Board to rule on the basis of its contents without the necessity of recourse to the record.' 29 C.F.R. § 102.67(d). The standards set forth by the Board for granting review in such cases are highly restrictive. They require a petitioner to show not merely that the regional director's decision was erroneous, but that there are 'compelling reasons' for review. 3 The Board thus denied Pepsi-Cola's petition on the ground that the issues raised were not substantial enough to warrant review. An election was then held in which a majority of those in the unit voted for the Union; the Board certified the Union as exclusive bargaining representative on October 26, 1967.

The Company, still convinced that the distributors were not employees, again sought to raise this issue before the Board. After consultation with counsel, it concluded that the way to bring the issue to a head was to decline to bargain, and by letter it so informed the Union. Predictably, as a result of the Company's action, the Board's General Counsel issued a complaint against Pepsi-Cola on January 26, 1968, charging that the refusal to bargain constituted an unfair labor practice in violation of 29 U.S.C. § 158(a)(1) and (5). In response, the Company's answer freely admitted the

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purported certification of the Union and its refusal to bargain, but reiterated its contention that the distributors were independent contractors.

At this point, the Company's well laid plans hit a snag. The General Counsel moved for summary judgment, relying on the Regional Director's decision in the representation proceedings, which the Board had already declined to review after its perusal of the Company's bare petition. The General Counsel's theory was that the decision of the Regional Director was final. 29 C.F.R. § 102.67(b). Further, the Board's own rule states 'denial of a request for review shall constitute an affirmance of the regional director's action which shall also preclude relitigating any such issues in any related subsequent unfair labor practice proceedings.' 29 C.F.R. § 102.67(f). On May 2, 1968, the Board granted the motion for summary judgment and ordered Pepsi-Cola to bargain with the union. It evidently agreed with the General Counsel's approach, for, as the parties have presented the issue to us, it did not reopen the question whether the distributors were employees or independent contracts-- the very reason for which the Company had decided to risk committing an unfair labor practice. Thus, the Board never reviewed the record independently of the Regional Director's conclusions on this issue, it simply swallowed his decision into its own. 4 It is this prohibition against disturbing the Regional Director's decision for any reason once the Board has concluded it does not meet the formidable standards for review set out in 29 C.F.R. § 102.67(c) which has brought Pepsi-Cola to this court.

II.

We are thus called upon to reconcile the Board's need to keep its house in an efficient manner by standards it believes will achieve that end with a litigant's right to have his case adjudicated by the persons Congress has chosen to make final decisions in labor cases. The Board's procedures, under 29 C.F.R. § 102.67 naturally emphasize the sedulous disposition of controversies. It is a system of review not unlike that available upon a writ of certiorari, which has been called 'the least satisfactory system of all.' Auerbach, Scope of Authority of Federal Administrative Agencies to Delegate Decision Making to Hearing Examiners, 48 Minn.L.Rev. 823, 865 (1964). In fact, the Board's procedure is even more cursory than certiorari since the petition for review must be a 'self-contained' document, cut adrift from the record. In a certiorari proceeding, by contrast, the record itself is certified to the higher court for examination and is before it upon consideration of the petition.

This shift of responsibility is dramatically illustrated by the facts of this case. Even the Board admits that the resolution of the question whether the distributors are employees or independent contractors is difficult and requires a fine-drawn balancing of facts and law. And for precisely this reason the Board has urged that we follow the rule of United Insurance Co., supra, that where the choice is between 'two fairly conflicting views,' the court must defer to the Board's decision. But here, the Board has not actually considered the questions of fact and law, as it did in United Insurance Co. Concluding that the Regional Director had not erred egregiously, it merely rubber-stamped his decision. Thus, the Regional Director's decision was perpetuated even though it may in fact have been wrong.

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And were we now to apply the doctrine of United Insurance Co. we too would be blindly endorsing the questionable result. Such deference...

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