414 F.2d 1194 (D.C. Cir. 1969), 21938, Local 1325, Retail Clerks Internation Association, AFL-CIO v. National Labor Relations Board

Docket Nº:21938, 22009.
Citation:414 F.2d 1194
Case Date:July 02, 1969
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

Page 1194

414 F.2d 1194 (D.C. Cir. 1969)



NATIONAL LABOR RELATIONS BOARD, Respondent, Adams Drug Company, Inc., Intervenor.



ADAMS DRUG COMPANY, Inc., Respondent.

Nos. 21938, 22009.

United States Court of Appeals, District of Columbia Circuit.

July 2, 1969

Argued Dec. 19, 1968.

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Mr. George R. Murphy, with whom Mr. S. G. Lippman, Washington, D.C., was on the brief, submitted on the brief for petitioners in No. 21,938.

Mr. John D. Burgoyne, Atty., National Labor Relations Board, with whom Messrs. Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, and Marcel Mallet-Prevost, Asst. Gen. Counsel, National Labor Relations Board, were on the brief, for petitioner in No. 22,009 and respondent in No. 21,938.

Mr. William J. Sheehan, Providence, R.I., with whom Mr. Abraham J. Harris, Washington, D.C., was on the brief, for respondent in No. 22,009.

Before DANAHER, [a1] McGOWAN and LEVENTHAL, Circuit Judges.

McGOWAN, Circuit Judge:

The National Labor Relations Board decided that the Adams Drug Company, a retail drug chain with stores in several states, had violated Section 8(a)(5) and (1) of the National Labor Relations Act by refusing to bargain with Retail Clerks Local 1325 after it had won an election and had been certified by the Board as the representative of the employees who worked in the Company's stores located in Rhode Island. In No. 22,009, the Board has petitioned for enforcement of its bargaining order directed to the Company. 1 The Company contends that:

(1) The Board erred in determining that an appropriate bargaining unit consisted of the company's employees in all of its Rhode Island drug stores; and that

(2) The Board erred in not giving the employer the opportunity, either before the regional director during the certification proceeding, or before the hearing examiner during the unfair labor practice proceeding to show by means of a hearing that the Union made election campaign claims which were inaccurate and prejudicial to a fair election.

Because we hold that the Board erred in its unit determination, and deny enforcement on that ground, we do not reach the second issue.


The Union on April 25, 1966 petitioned the Board to hold a representation election for a unit composed of 'all employees working in the Employer's Rhode Island Stores.' When a hearing was held on this petition, the Company urged that the smallest appropriate unit would include the employees of all of the Company's New England stores. 2

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At this hearing it developed that the Company had a total of eighty-three retail drug stores, most of them concentrated in New England and New York, but with some located as far away as Kansas and Oklahoma. There were forty-five stores in the New England region: Twenty-five were in Rhode Island, thirteen in Massachusetts, and seven in Connecticut. Of the twenty-five Rhode Island stores, all but one were located in the northeast section of the state in the Providence-Pawtucket-Warwick metropolitan area. Four of the Massachusetts stores are less than 8 miles from these Greater Providence stores and one of these-- the store in Attleboro, Massachusetts-- is in the Providence Metropolitan area. The other nine Massachusetts stores were more distant. The seven stores in Connecticut were all 50 miles or more from any of the Rhode Island stores.

Certain aspects of the Company's operations were centralized. The central office and warehouse, located in Rhode Island, kept employee and other records, the payroll, and a central inventory of merchandise for all the company stores. All the stores in New England made up an operating division. Day-to-day operating responsibility was vested in the manager of an individual store. The store manager also, subject to central office approval, hired almost all of a store's employees, recommended promotions, and determined the size of the store's work force.

On the basis of the facts developed at the hearing, the Board's Regional Director concluded that a unit composed of the Company's Rhode Island stores was inappropriate because the Rhode Island stores did not constitute an administrative division of the Company's operations and further because there was no reason to distinguish the Rhode Island stores from nearby stores in Massachuetts and Connecticut. 3 Since the Union declined to participate in an election in respect of any other unit, the Regional Director dismissed the Union's petition.

The Union sought review by the Board of this ruling. 4 The Board reversed the Regional Director and found that a unit limited to Rhode Island and appropriate. The Board did not dispute the Regional Director's finding that the Rhode Island stores were not an administrative division of the company, and it conceded that on the facts shown it could approve as 'appropriate' a unit which was (1) 'Employer-wide,' (2) 'New England area-wide,' (3) Providence metropolitan area-wide, or (4) an individual store. Stating that 'the Board has long held that the petitioning labor organization needs only to establish that the group of employees it has attempted to organize and seeks to represent is 'an appropriate

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unit," the Board went on to find:

We are persuaded that the employees in the Rhode Island stores enjoy a special community of interest apart from the other by reason of the State's regulation of the retail drug industry. The Board has stated in cases arising in the insurance industry with the Board's for purposes of within a State may constitute appropriate geographic area units. We believe the same considerations apply to retail drug chains. The State of Rhode Island, under its police power, can and does regulate pharmacies and the sale and distribution of pharmaceutical cosmetic, food and other products within its political boundaries. This control by the State also affects the terms and conditions of employment of all employees in the drug stores.12 We conclude, therefore, that

all drug stores of the employer within the boundaries of the State of Rhode Island constitute a clearly delimited geographic area appropriate for purposes of collective bargaining. 164 N.L.R.B. No. 71 (1967) (footnote 11 omitted, footnote 12 included).

It therefore concluded that the Rhode Island stores were 'an' appropriate unit, notwithstanding the fact that there might be other appropriate units. This determination was not disturbed in the unfair labor practice proceeding.

The Company contests the appropriateness of this unit on several grounds. First, the Company points out that the state regulation of retail drug stores referred to by the Board is concerned with the examination and registration of pharmacists-- employees whom the Board determined to be 'supervisors' and therefore not within the Adams Drug Unit. Second, the other food, drug and cosmetic laws of Rhode Island, if they apply to the Company at all, would only affect the management personnel, and would have 'no effect on hours, wages, and conditions of employment.' Thus the Company claims there is nothing about the regulatory laws of Rhode Island which make a state-wide unit appropriate. Third, the Company contends that, even if the stores in the Providence metropolitan area would constitute an appropriate unit, this would not validate the state-wide unit chosen by the Board, since this unit includes a Rhode Island store outside the Providence metropolitan area, and excludes a Massachusetts store within that area. Fourth, the Company argues that the Board's earlier decisions, which found state-wide units appropriate for insurance field offices, were inapposite, for the reason that, unlike the situation in those cases, the employees in each of the Company's stores worked essentially 'for the within only one store' and did not work throughout a 'territory.' The Company therefore concludes that the Board has acted arbitrarily, and in fact has constructed a unit based solely on the extent of the Union's organization in violation of Section 9(c)(5) of the Act. Before dealing with these contentions, however, it may be useful to examine the statutory framework under which the Board approves units, and to identify the standards to be applied by the Board and the scope of judicial review of its actions.


In choosing an 'appropriate unit' for collective bargaining purposes, the Board performs an extraordinarily important and difficult task, touching on strong interests of the employer, the union, and the employees. The Board often must choose among several alternative units, each of which may have

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rational foundations. For a retail chain consisting of a network of individual stores, one can conceive of a wide assortment of alternative units. To name but a few of the alternatives, the unit might consist of all the employees who work within the stores in a particular geographic area or administrative division of the company, or all the employees working within a single outlet. Because the representation election is held only within the approved unit, the boundaries of the unit chosen by the Board will often have a substantial impact on whether a union's organizing efforts prove successful.

The interest of employer and union will often be in conflict in such situations. The latter will often contend for a narrower unit than the company desires.

From the union's standpoint, a narrowly defined unit may markedly influence the success of an organizing drive, for it may be much easier to win elections in a few separate stores than to mount a successful campaign simultaneously in a number of...

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