N.L.R.B. v. FMG Industries

• Decision Date: 17 June 1987
• Docket Number: No. 81-7180,81-7180
• Citation: 820 F.2d 289
• Parties: 125 L.R.R.M. (BNA) 3013, 106 Lab.Cas. P 12,409 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FMG INDUSTRIES dba Gamco Industries, and Galaxie Universal Corp., Inc., Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 289

820 F.2d 289

125 L.R.R.M. (BNA) 3013, 106 Lab.Cas. P 12,409

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FMG INDUSTRIES dba Gamco Industries, and Galaxie Universal

Corp., Inc., Respondents.

No. 81-7180.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Aug. 4, 1986.

Decided June 17, 1987.

Peter Ames Eveleth and Bernard P. Jeweler, Washington, D.C., for petitioner.

David Silverman, Encino, Cal., for respondents.

On Petition for Adjudication in Civil Contempt and for other Relief.

Before TANG, BRUNETTI and LEAVY, Circuit Judges.

BRUNETTI, Circuit Judge:

INTRODUCTION

These proceedings result from the petition of the National Labor Relations Board (Board) to adjudge both FMG Industries, dba GAMCO Industries (FMG), and Galaxie Universal Corp., Inc. (Galaxie) as the successor to FMG, in civil contempt for failing to comply with this court's decision enforcing a Board order directed at FMG and its successors. We review the Special Master's conclusion that due process requires that determinations of successorship status be made in the first instance by the Board and not by a court of appeals in contempt proceedings.

FACTS AND PROCEEDINGS

On January 15, 1980, the Miscellaneous Warehousemen, Drivers and Helpers, Local 986, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (the Union) was certified as the exclusive bargaining representative for FMG's shipping and receiving employees, warehousemen and truck drivers, and a unit of the company's production and maintenance employees. On July 21, 1980, the Board found that FMG was engaged in an unfair labor practice by refusing to negotiate with the Union. We enforced the unheeded Board decision and ordered FMG, "its officers, agents, successors, and assigns" to commence collective bargaining with the Union.

Because FMG continued to ignore Board and court orders, the Board instituted contempt proceedings in this court. We suspended these proceedings, relying on FMG's indications that it would commence bargaining with the Union. The company's promises, however, essentially have been unfulfilled.

In May 1982 the Board was advised that FMG's business had been sold to Galaxie. Following an investigation of the sale, the Board determined that Galaxie was a successor to FMG and thus liable for the unfair labor practices of its predecessor. Accordingly, the Board amended its contempt petition, alleging that Galaxie had failed to During a pretrial conference with a Special Master appointed by this court, Galaxie moved for dismissal, arguing that fifth amendment due process guarantees required the Board preliminarily to determine the successorship issue. In an offer of proof, the Board referred to evidence that purportedly would reveal that Galaxie's non-successorship defense was a sham. Counsel for Galaxie responded by offering to produce evidence that allegedly controverted the Board's claims.

comply with the Board's enforced order directed at FMG and its "successors."

The Special Master recommended that supplemental proceedings be held by the NLRB before an adjudication of contempt as to Galaxie. This recommendation was based on the Special Master's conclusion that courts of appeals were without jurisdiction to determine successorship because due process guarantees required the Board to resolve the issues first. Alternatively, the Special Master based the recommendation on grounds of judicial policy and economy, finding that, even if the court had jurisdiction, the case presented a bona fide factual dispute concerning successorship that necessitated initial Board review.

FMG was thereafter found by the Special Master to be in civil contempt; however, FMG and the Board subsequently reached a settlement, obviating the need for further proceedings involving FMG. Consequently, our review is limited to two issues: whether this court has jurisdiction to determine in a contempt proceeding whether Galaxie is a successor to FMG when the Board has not first convened a hearing on the question; and, if so, whether reasons of judicial policy and economy counsel against exercising jurisdiction in the present case?

STANDARD OF REVIEW

A Special Master's findings of fact will not be disturbed unless clearly erroneous. N.L.R.B. v. Sequoia District Council of Carpenters, 568 F.2d 628, 631 (9th Cir.1977). A Special Master's conclusions of law receive no deference. Oil, Chemical & Atomic Workers Int'l Union v. N.L.R.B., 547 F.2d 575, 580 (D.C.Cir.1977) cert. denied, 431 U.S. 966, 97 S.Ct. 2923, 53 L.Ed.2d 1062 (1977).

DISCUSSION

A. Due Process Right to an Initial Board Determination

The issue raised here previously has been discussed in other circuits. In Aquabrom v. N.L.R.B., 746 F.2d 334 (6th Cir.1984), a chemical company, Drug Research Inc., refused to negotiate with the union elected by the employees of the company's Adrian, Michigan, plant. The union was certified as the exclusive bargaining representative for the plant's employees. Prior to the Board's ruling on certification, Great Lakes Chemical Corp. (Great Lakes) purchased the plant. Thereafter, the Board ordered Drug Research, "its officers, agents, successors, and assigns," to bargain with the union. Id. at 335 (emphasis in original). Great Lakes refused to bargain, claiming not to be a successor. Without convening a prior Board hearing on the successorship question, the Board instituted contempt proceedings before the court of appeals. A Special Master appointed by the court found Great Lakes was a successor corporation and thus responsible for the remedial steps outlined in the Board's enforced order.

The court did not review the merits of the Special Master's findings, holding that the Board must make the initial determination of successorship, and remanded the case to the Board. See Id. at 336. The court drew authority for its position from Golden State Bottling Co. v. N.L.R.B., 414 U.S. 168, 180, 94 S.Ct. 414, 423, 38 L.Ed.2d 388 (1973), where the Supreme Court stated:

The tie between the offending employer and the bona fide purchaser of the business, supplied by a Board finding of a continuing business enterprise, establishes the requisite relationship of dependence. Moreover, procedures were announced in Perma Vinyl which provide the necessary procedural safeguards. There will be no adjudication of liability against a bona fide successor "without affording [it] a full opportunity at a hearing The court in Aquabrom concluded that the prerequisite hearing referenced in Golden State meant a hearing before the Board, stating: "[w]e do not believe that the Supreme Court meant for us to focus only on the safeguards and not the forum in which they are provided." 746 F.2d at 336. Galaxie urges us to adopt this interpretation of the Supreme Court's language in Golden State.

                after adequate notice, to present evidence on the question of whether it is a successor which is responsible for remedying a predecessor's unfair labor practices.  The successor [will] also be entitled, of course, to be heard against the enforcement of any order issued against it."    (Citations omitted)
                

It is clear that notice and a hearing on the successorship issue are prerequisites to imposing liability on the purchaser of a business for the predecessor's unfair labor practices. Due process, however, does not require that the initial hearing be conducted by the Board. In Golden State, unlike the present case, a Board hearing was conducted, resulting in a finding that the acquiring company was a successor and so was liable under the enforced order. 414 U.S. at 171, 94 S.Ct. at 418. Unlike the court in Aquabrom, however, we are unable to infer from the fact that in Golden State there was a Board hearing, that the Supreme Court was requiring a hearing before the Board.

Other opinions implying that courts of appeals are competent to resolve successorship issues provide evidence that the Supreme Court in Golden State was not conferring exclusive original jurisdiction on the Board over such questions. In Southport Petroleum Co. v. N.L.R.B., 315 U.S. 100, 106, 62 S.Ct. 452, 456, 86 L.Ed. 718 (1942), the Court commented on determinations of an aspect of the successorship issue--whether the original offending company had escaped liability by completely divesting itself of ownership--stating:

Whether there was a bona fide discontinuance and a true change of ownership--which would terminate the duty of reinstatement created by the Board's order--or merely a disguised continuance of the old employer, does not clearly appear, and accordingly is a question of fact properly to be resolved by the Board on direct resort to it, or by the court if contempt proceedings are instituted.

In N.L.R.B. v. Ozark Hardwood Co., 282 F.2d 1 (8th Cir.1960), the 8th Circuit also indicated that courts of appeals could make successorship determinations. Interestingly, in Ozark, a company found by the Board to be a successor business, challenged the Board's finding on a basis quite the opposite of that advanced here--that allowing the Board to decide the company's status as a successor violated the company's due process rights. Id. at 4. According to the company, the question could be resolved only through enforcement proceedings before the court. Id. Holding that no due process violation occurred when the court referred the successorship issue to the Board, the court reasoned:

This was an inquiry in which the court could itself have ancillarily engaged, in attempted effectuation of its decree, by means of a contempt citation and a show-cause order. Equally would the court be at liberty, in our opinion, to call upon or permit the Board to make facilitating examination, determination and record as a basis for judicial consideration....

Id. at 4. The court in Ozark Hardwood cited Southport Petroleum for the proposition that either the court of appeals in a contempt proceeding or the Board may confront such...