735 F.2d 1384 (D.C. Cir. 1984), 83-1113, Local 1814, Intern. Longshoremen's Ass'n, AFL-CIO v. N.L.R.B.

Docket Nº:83-1113, 83-1117.
Citation:735 F.2d 1384
Case Date:May 15, 1984
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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735 F.2d 1384 (D.C. Cir. 1984)


AFL-CIO, Petitioner,






Nos. 83-1113, 83-1117.

United States Court of Appeals, District of Columbia Circuit

May 15, 1984

Argued Nov. 10, 1983.

As Amended May 21 and

July 20, 1984.

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[Copyrighted Material Omitted]

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Petition for Review of an Order of the National Labor Relations Board and Cross-Application for Enforcement.

James M. Altman, New York City, with whom David Jaffe, New York City, was on brief, for petitioner in No. 83-1113. Howard Schulman, New York City, also entered an appearance for petitioner.

Andrew E. Zelman, New York City, with whom Ellen R. Mandelbaum, New York City, was on brief, for petitioner in No. 83-1117.

Allison W. Brown, Jr., Atty., N.L.R.B., Washington, D.C., with whom Elliott Moore, Deputy Associate General Counsel, Washington, D.C., was on brief, for respondent in Nos. 83-1113 and 83-1117.

Before WILKEY and WALD, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge MacKINNON.

Dissenting opinion filed by Circuit Judge WALD.

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MacKINNON, Senior Circuit Judge:

This is a truly stark case of corruption in labor-management relations. Presented to this Court are legal questions of considerable importance and some novelty: the responsibility of a union that obtains a union shop agreement from an employer as part of a corrupt agreement to pay the union's highest officers to steer work to the employer from other businesses, and the authority of the National Labor Relations Board ("NLRB") to remedy the effects of such unlawful concealed assistance. Both Jackson Engineering Co., Inc. ("Jackson," or the "Company," or the "Employer"), and Local 1814 of the International Longshoremen's Association, AFL-CIO ("Local 1814" or the "Union") petition to reverse the Board's decision.

In 1975, the president of Jackson struck a deal with the two highest officials of the Union: the Company would welcome the Union's representation of Jackson's employees if the Union would steer business to the Employer. In addition to extending their Union's representation and authority, the Union officials were to receive a ten percent cash kickback for the business that Local 1814 referred to Jackson. As all parties are agreed, the execution of this agreement over the next few years was a blatant violation of the anti-bribery provision of the National Labor Relations Act ("NLRA"), 29 U.S.C. Sec. 186 (1976).

Petitioners seek review of the NLRB's order holding that the kickback arrangement, involving as it did the contribution of support by the Employer to the Union, constituted unfair labor practices on the part of both the Employer and the Union. 1 The Board ordered petitioners to cease and desist from such actions, and further ordered Jackson to withdraw its voluntary recognition of Local 1814 as the exclusive collective bargaining representative of Jackson's employees until the Union was certified by the Board, that the current collective bargaining agreement be abrogated, and that Jackson and Local 1814 jointly reimburse Jackson's employees for all union dues and related membership fees paid under the union security clause in the 1979 collective bargaining agreement.

Petitioners' first objection to the Board's decision is that the illegal acts of the Union's officers are not attributable to the Union itself, and thus that neither the Union nor the Employer Jackson committed an unfair labor practice. We disagree. Local 1814 was properly held responsible for these acts of its highest officers--actions closely related to the conduct of the Union's business, which would foreseeably yield benefits to the Union itself, and which did in fact yield such benefits.

Petitioners further contend that the Board lacked authority to take affirmative remedial steps against the Union and the Employer because the Union local always represented an uncoerced majority of the Jackson employees. As far as this Court is aware, the NLRB has never before applied such affirmative remedies to a case of concealed unlawful assistance by an employer to a union. In that sense, this is a case of first impression. This Court recognizes, however, that the fashioning of remedies in the field of labor relations frequently calls for flexible application of familiar statutory policies to novel factual situations, and that the Board possesses broad discretion in the matching of remedies to wrongs. Cognizant of such administrative discretion, and attentive to the central policy of the NLRA--to allow workers free exercise of their rights to bargain collectively--we rule that the remedies ordered by the Board bear a reasonable relation to the violations found. Where corruption is endemic to the relations between an employer and union,

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the Board is justified in requiring a fresh start under which employees may freely designate a collective bargaining representative of their choice.


The facts of this case indicate the existence of a deliberate, flagrant, and very substantial kickback scheme between Jackson and Local 1814. Those facts are extensive but deserve detailed attention: they provide the basis both for holding the Union responsible for the conduct of its officers, and for the authority of the Board to order the remedies that it did.

  1. The Origin of the Kickback Arrangement

    Jackson is a New Jersey corporation performing ship building maintenance, and repair at sites in New Jersey and New York. Jackson began operations in 1948, and until 1975, its employees were not represented by any labor organization. Some time in 1975, Nicholas Seregos, who was at all relevant times the principal owner and president of Jackson, came to the conclusion that his Company's efforts to get business had been hampered by the fact that its work force was not unionized. In particular, Seregos had observed over time that United States flag ships would repeatedly reject his solicitations on the grounds that Jackson was not a union shop. Sonny Montella, an acquaintance of Seregos, suggested to him that he contact Anthony Anastasio, the Secretary-Treasurer and later Executive Vice President of the predecessor of Local 1814 of the International Longshoremen's Association, AFL-CIO ("ILA"). 2

    Seregos contacted Anastasio at the Union's office and expressed his interest in both obtaining some business for Jackson and unionizing his shop. Anastasio then met with the employees to see if they would be willing to sign up with the Union; the record is silent as to the events of this meeting.

    Seregos and Anastasio met again sometime shortly before July 11, 1975. Anastasio offered to get Jackson some business in exchange for a kickback of ten percent of the proceeds; Anastasio made it clear to Seregos that he would refer business to Jackson only on the condition that the firm unionized. Seregos agreed to both the kickback arrangement and to unionization of Jackson's workforce.

    Seregos and Anastasio next met in the Local 1814 office around July 11, 1975. Anastasio told Seregos that he could help get Jackson business from Prudential Lines, a United States flag line, and instructed Seregos to write to a particular officer at Prudential. Seregos' letter to Prudential, dated July 11, 1975, falsely stressed that his firm was a union shop affiliated with Local 1814. Not until September 15, 1975, did Local 1814 actually obtain authorization cards from Jackson's employees. In late September, Seregos, for Jackson, signed a memorandum of understanding with Local 1814, agreeing to recognize the Union. The Company began to check off employees' union dues and forward the funds to the Union.

    Next, sometime in the fall of 1975, Seregos and Anastasio met with Anthony Scotto, president of Local 1814, at the Union's office. Seregos asked for more work referrals; Anastasio indicated that he could help Jackson get work with United States Shipping Lines. Anastasio then asked how Seregos was going to pay the ten percent kickback on the business. Scotto offered to help Seregos set up a foreign corporation to smooth the arrangement, but Seregos declined the offer. Seregos, Scotto, and Anastasio then signed a collective bargaining agreement--a multi-employer contract

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    covering eleven other employers in the industry--binding Jackson for a period of three years from November 3, 1975.

    Soon after this meeting, Jackson got work from two shipping lines. Jackson started to receive business from Prudential in September, 1975. In late 1975, after Jackson had begun receiving business from Prudential and United States Shipping Lines, Seregos and Anastasio further discussed the method of payment for the kickbacks, and agreed that Seregos would pay Anastasio in cash.

    In early 1976, the ten percent payments began; they were made in cash at the Local 1814 office with only Seregos and Anastasio present. For the business referred to Jackson from the two shipping lines for 1976, Seregos paid Anastasio $15,000. The total for 1977 was $16,000. 3 During 1978, the payments totalled $28,700. 4 Throughout this period, Seregos and Anastasio were responsible for administering the collective bargaining agreement between Jackson and Local 1814. Between 1975 and 1979, both Jackson's business and its number of employees--all Local 1814 members--grew considerably. On November 3, 1978, Jackson and Local 1814 agreed to a modified three-year renewal of their collective bargaining agreement; Seregos signed for Jackson, and Anastasio and...

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