N.L.R.B. v. Sav-On-Drugs, Inc.

Decision Date27 June 1983
Docket NumberSAV-ON-DRUG,No. 82-7484,INC,82-7484
Citation709 F.2d 536
Parties113 L.R.R.M. (BNA) 3255, 97 Lab.Cas. P 10,246 NATIONAL LABOR RELATIONS BOARD, Petitioner, v., Respondent.
CourtU.S. Court of Appeals — Ninth Circuit

Elliott Moore, N.L.R.B., Washington, D.C., for petitioner.

Thomas S. Kerrigan, Timothy F. Ryan, McLaughlin & Irvin, Los Angeles, Cal., for respondent.

On Application for Enforcement of an Order of the National Labor Relations Board.

Before ELY, SNEED and TANG, Circuit Judges.

TANG, Circuit Judge:

The National Labor Relations Board ["the Board"] petitions for enforcement of its May 28, 1982 orders, pertaining to the refusal of Sav-On-Drugs, Inc. ["Sav-On" or "the company"] to bargain and to Sav-On's unilateral changes in terms and conditions of employment. Sav-On opposes the Board's application alleging that the Board abused its discretion in (1) reviewing and overturning the Regional Director's decision, and (2) in disposing of the case by summary judgment, thereby precluding Sav-On from adducing evidence of prejudice suffered by its reliance on the Regional Director's representation decision. Sav-On's arguments are meritless. We enforce the Board's orders in full.

I BACKGROUND

On May 1, 1978, the Guild for Professional Pharmacists ["the Guild"] petitioned the Board seeking to represent all pharmacists employed by Sav-On in California. The Regional Director dismissed the petitions on September 26, 1978, ruling that the Guild was not a labor organization within the meaning of section 2(5) (29 U.S.C. Sec. 152(5)) of the National Labor Relations Act ["the Act"] because it was dominated by employees classified as pharmacy managers. The Regional Director found this classification to be supervisory.

On October 6, 1978, the Guild timely requested the Board to review the Regional Director's decision. The Board granted the request on November 8, 1978.

While the Board's decision in the representation case was still pending on January 5, 1979, the company discharged two pharmacy managers because of their union activity. The Guild promptly filed unfair labor practice ["ULP"] charges alleging violations of section 8(a)(3) and (1) (29 U.S.C. Sec. 158(a)(3) and (1)) of the Act. There was also a strike by 59 pharmacy employees. Sav-On responded by discharging all the strikers.

Subsequently, on July 31, 1979, the full Board issued its decision on review of the Regional Director's determination in the representation case. Sav-On Drugs, Inc., 243 N.L.R.B. 859 (1979). The Board by majority decision concluded as a matter of law that the Regional Director erroneously determined that the Guild was not a labor organization. It also found that the pharmacy managers were not supervisors within the meaning of the Act. The Board ordered an election and a representation election was conducted on November 28, 1979. The Guild was designated as their representative by a majority of the unit employees.

On December 18, 1980, the Board filed its decision in the ULP proceeding involving the discharged pharmacy employees. Sav-On Drugs, Inc., 253 N.L.R.B. 816 (1980). It found that Sav-On violated section 8(a)(3) and (1) of the Act by discharging the two pharmacy managers and the strikers. The Board petitioned this court for enforcement of its order requiring an offer of reinstatement and back pay to the discharged employees. This court declined to enforce the Board's order because of the Guild's failure to request a stay of the dismissal of the representation petition and the unions' disruption of the status quo during the period between the Regional Director's decision and the Board's review. N.L.R.B. v. Sav-On Drugs, Inc., 704 F.2d 1147 (9th Cir.1983).

On February 10, 1981, the Guild was certified by the Regional Director as the pharmacists' collective bargaining representative. On February 19, 1981, and again on March 26, 1981, the Guild made a written request to Sav-On for the commencement of bargaining. On April 9, 1981, the company notified the Guild of its refusal to bargain.

On April 22, 1981, the Guild filed a ULP charge alleging that the company's refusal to bargain violated section 8(a)(5) and (1) of the Act (29 U.S.C. Sec. 158(a)(5) and (1)). The General Counsel moved for transfer of the On July 21, 1981, the Guild filed an additional ULP charge alleging that the company unilaterally changed terms and conditions of employment by granting a wage increase to unit employees on May 4, 1981, in violation of section 8(a)(5) and (1) of the Act (29 U.S.C. Sec. 158(a)(5) and (1)). The General Counsel moved for transfer and summary judgment as to this charge also. The company opposed the motion on the same grounds set forth above.

ULP proceeding to the Board and for summary judgment. The company opposed summary judgment on the grounds that the Guild was not qualified to be a collective bargaining representative because it is dominated by supervisors, that the Board abused its discretion in reversing the Regional Director's representation decision, that the Board's procedural action denied the company due process of law, and that a material issue of fact existed, i.e., prejudice suffered by the company as a result of the Board's reversal of the Regional Director's representation decision.

On May 28, 1982, the Board issued decisions and orders granting the motions for summary judgment in both cases. Sav-On Drugs, Inc., 261 N.L.R.B. No. 189, 110 L.R.R.M. (BNA) 1199 (1982) (refusal to bargain); Sav-On Drugs, Inc., 261 N.L.R.B. No. 174, 110 L.R.R.M. (BNA) 1231 (1982) (unilateral wage increase). The Board found the company's affirmative defenses devoid of merit. It ordered the company to cease and desist from refusing to bargain with the Guild, from unilaterally granting wage increases and from interfering with, restraining or coercing employees in any like or related manner. Affirmatively, the Board ordered the company to bargain with the Guild, to embody any resulting agreement in a signed contract, and to post appropriate notices. The Board is before this court seeking enforcement of the orders issued on May 28, 1982. The company opposes the Board's application for enforcement on two grounds. Sav-On contends that: (1) the Board abused its discretion in granting review of and overturning the decision and order of the Regional Director; and (2) the Board abused its discretion in disposing of the case by summary judgment thereby precluding the company from adducing evidence of prejudice and hardship.

II THE BOARD'S REVIEW
A. Grant of Review

The company argues that the Board deviated from the rules set forth in 29 C.F.R. Sec. 102.67(c) governing review of decisions of the Regional Director in representation cases. That regulation provides:

The Board will grant a request for review only where compelling reasons exist therefor. Accordingly, a request for review may be granted only upon one or more of the following grounds:

(1) That a substantial question of law or policy is raised because of (i) the absence of, or (ii) a departure from officially reported Board precedent.

(2) That the Regional Director's decision on a substantial factual issue is clearly erroneous on the record and such error prejudicially affects the rights of a party.

(3) That the conduct of the hearing or any ruling made in connection with the proceeding has resulted in prejudicial error.

(4) That there are compelling reasons for reconsideration of an important Board rule or policy.

29 C.F.R. Sec. 102.67(c) (1982).

The company claims these standards are "highly restrictive" of the Board's right to review and the Board may not grant review absent "compelling reasons" premised on one of the grounds specified in the regulation. According to the company, the Board failed to disclose the ground upon which review was granted and adequate grounds for review were nonexistent. It asserts for these reasons that the Board abused its discretion by failing to comply with its own rules. The company does not, however, challenge the merits of the Board's conclusion.

Sav-On relies primarily on Pepsi-Cola Buffalo Bottling Co. v. N.L.R.B., 409 F.2d 676 (2d Cir.), cert. denied, 396 U.S. 904, 90 S.Ct. 219, 24 L.Ed.2d 181 (1969) as support for its position that the standards for the Board's grant of review of decisions of the Regional Director in representation cases are "highly restrictive". In that case the union petitioned for certification as the representative of the company's distributors. The company sought denial of certification on the ground that the distributors were independent contractors. The Regional Director found that the distributors were employees and ordered an election. The employer petitioned the Board for review. The Board denied review on the ground that the issues raised by the company were not sufficiently compelling to warrant review under 29 C.F.R. Sec. 102.67(c). The union won the election. The employer refused to bargain and was charged with an unfair labor practice. The General Counsel moved the Board for summary judgment in the ULP proceeding. The Board ruled that under 29 C.F.R. Sec. 102.67(f) denial of a request for review of a Regional Director's decision constitutes an affirmance and parties are precluded from relitigating any issues related to the Regional Director's decision in a related subsequent ULP proceeding. The Board granted the General Counsel's motion. The Second Circuit observed that subsection (c) was "highly restrictive" of the Board's right to review decisions of the Regional Director (id. at 678) and subsection (f) operated to preclude the Board from considering, in ULP proceedings, questions related to the underlying representation case. Id. at 679. Thus, most representation questions escaped Board review with a consequent shift of responsibility from the Board to the Regional Director. Id. The court noted that such deference to the Regional Director was not...

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