Aguayao ex rel. N.L.R.B. v. Quadrtech Corp.

• Decision Date: 21 November 2000
• Docket Number: No. CV 00-11039 CM MANX.,CV 00-11039 CM MANX.
• Citation: 129 F.Supp.2d 1273
• Court: U.S. District Court — Central District of California
• Parties: Victoria AGUAYAO, Regional Director of the Twenty-First Region of the National Labor Relations Board, for and on the behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner, v. QUADRTECH CORPORATION, Respondent.

129 F.Supp.2d 1273

Victoria AGUAYAO, Regional Director of the Twenty-First Region of the National Labor Relations Board, for and on the behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner, v. QUADRTECH CORPORATION, Respondent.

No. CV 00-11039 CM MANX.

United States District Court, C.D. California.

November 21, 2000.

Julie B. Gutman, Neial A. Warheit, William M. Pate, Los Angeles, CA, for petitioner.

Gregory G. Kennedy, Deborah H. Petito, Douglas H. Hoang, Goldstein, Kennedy & Petito, Los Angeles, CA, for respondent.

ORDER GRANTING PRELIMINARY INJUNCTION

MORENO, District Judge.

The Court, having considered the moving papers, the opposition, and all further evidence and argument submitted in support of the parties' papers, grants the Petitioner's motion for a preliminary injunction.

I. Background

The instant case concerns a labor dispute between Respondent Quadrtech, Inc. ("Quadrtech" or "Respondent") and Maria A. Venegas ("Venegas") and the International Union of Electronic, Electrical, Salaried, Machine Furniture Workers, AFL — CIO ("IUE" or "the Union"). Venegas and IUE have filed charges against Quadrtech in cases that are before the Petitioner, National Labor Relations Board ("NLRB" or "the Board"). The NLRB brings this case pursuant to 29 U.S.C. § 160(j). The NLRB petitions this Court to enjoin Respondent from relocating to Mexico pending resolution of the aforementioned labor dispute.

Respondent manufactures jewelry and piercing machines. In or about January 2000, Quadrtech opened shop in Gardena, California. It is alleged that Quadrtech's owner, Vladimir Reil ("Reil"), owns a jewelry company in Harbor City, California called Onyx. Prior to January, 2000, Reil's entire business operation was located in Harbor City. Respondent allegedly initiated a "lock-out" on May 18, 2000 following employee protests over working conditions. On May 18, 2000 Venegas filed a charge with the Board in Case 21-CA-339997. Also on May 18, 2000, IUE filed a petition with the Board for a union election at the Respondent's Gardena facility. The election was set for June 29, 2000.

Between May 18 and June 29, 2000, Respondent engaged in various activities to discourage Quadrtech employees from unionizing. The Petitioner alleges that Quadrtech's activities were unlawful. The Board submits voluminous affidavit evidence suggesting that, inter alia, Quadrtech's owner and agents interrogated Quadrtech employees as to their union sympathies and activities; threatened employees with job loss and reductions in benefits if they voted in favor of the Union; suggested the plant would relocate if employees voted in favor of the Union; and promised benefits to employees if they voted against the Union.

On June 29, 2000, the approximately 118 eligible unit employees at the Gardena facility voted in favor of the Union. On July 12, 2000, the Union was certified as the exclusive collective bargaining representative of the unit. On July 13, 2000, Respondent's attorney, Gregory Kennedy, dispatched a letter to the Union indicating that Quadrtech would be relocating certain production jobs to Mexico. The letter stated that, as a consequence of the relocation, Quadrtech would lay off up to 80 unit employees between November 3 and November 17, 2000. The letter articulates the Respondent's willingness to engage in "good faith" bargaining with the Union regarding the effects of Respondent's decision. Respondent did not in any way indicate prior to July 13, 2000 that it was planning to relocate. On July 13, 2000, the Union filed a charge against Quadrtech with the Board in Case 21-CA-34084.

The Board argues that if Respondent is not enjoined from relocating to Mexico, the NLRB's ability to adjudicate Cases 21-CA-33997 and 21-CA-34084 will be irremediably harmed.

II. Standard

Section 10(j) of the NLRA, 29 U.S.C. § 160(j), authorizes the NLRB to petition United States district courts for injunctions against unlawful labor practices pending their adjudication before the Board. District courts are, in turn, empowered to grant injunctions where they appear "just and proper."¹ There is variation between circuits as to the standard for granting a Section 10(j) injunction. Until recently, the Ninth Circuit embraced a standard that was rather generous to the NLRB. See Scott ex rel. NLRB v. El Farra Enters., Inc., 863 F.2d 670, 673-74 (9th Cir.1988) (promulgating a two-part test that first asked whether the Board had reasonable cause to believe the employer violated the NLRA and, second, whether an injunction was necessary to prevent frustration of the NLRA's remedial purpose); Aguayo ex rel. NLRB v. Tomco Carburetor Co., 853 F.2d 744, 747 (9th Cir.1988) (same). Other circuits continue to embrace this standard. See, e.g., Kaynard v. Mego Corp., 633 F.2d 1026, 1033 (2d Cir.1980). Hirsch v. Dorsey Trailers, Inc., 147 F.3d 243, 247 (3d Cir.1998).

The Ninth Circuit has overruled Tomco and El Farra and deployed a more stringent standard in their stead. Miller v. California Pacific Medical Center, 19 F.3d 449, 457 (1994) (en banc). This, more stringent standard, interprets Section 10(j)'s "just and proper" language through the lens of traditional equitable principles.² Miller, however, does not instruct district courts to rely on traditional equitable principles as understood in non-labor contexts. Rather, the Ninth Circuit has instructed that lower courts apply traditional equitable principles in a manner that is ensitive to Section 10(j)'s primary purpose: "to protect the integrity of the collective bargaining process and to preserve the Board's remedial power while it processes the charge." Id. at 459-60. Section 10(j) seeks to "ensure that an unfair labor practice will not succeed because the Board takes too long ... to adjudicate the charge." Id. at 460.

This Court will not simply sign off on the Board's request for equitable relief. Id. at 458. The Board must demonstrate that it has at least a fair chance of winning its case on the merits. Id. at 460. The Court will determine whether the Board has met its burden in light of the Court's lack of jurisdiction over the unfair labor practice in question and the appellate deference accorded to NLRB determinations. Id. (citing NLRB v. City Disposal Sys., Inc., 465 U.S. 822, 829, 104 S.Ct. 1505, 79 L.Ed.2d 839 (1984)). The Board can "make a threshold showing of likelihood of success by producing some evidence to support the unfair labor practice charge together with an arguable theory." Id.

If the Board demonstrates that it is likely to prevail on the merits, the Court shall presume that irreparable injury would result absent the preliminary injunction. Id. If the Board has only a fair chance of prevailing on the merits, the Court must consider the possibility of irreparable injury. Id.

III. Analysis

A. The Merits

The NLRB argues that Respondent's decision to relocate production facilities to Mexico violates Sections 8(a)(1), (3), and (5) of the NLRA. For reasons discussed below, the Court concludes that the NLRB is likely to prevail on its claim.

1. Defendant's Decision to Lay off Employees and Relocate

Section 8(a)(3) of the NLRA, 29 U.S.C. § 158(a)(3), defines an unfair labor practice by an employer as one which is discriminatory in a manner that discourages membership in a labor organization.³ An employer may not relocate a plant in order to thwart the unionization of its workers. See, e.g., NLRB v. Taylor Machine Products, Inc., 136 F.3d 507, 515 (6th Cir.1998). Courts have held that even where a relocation is lawful, an employer may not use it as a vehicle by which to rid itself of unionized employees. See, e.g., Dunbar v. Colony Liquor and Wine Distr., LLC., 15 F.Supp.2d 223, 234 (N.D.N.Y. 1998).

Section 8(a)(3) only prohibits relocations that are motivated by unlawful intentions. Presently, the Respondent asserts that legitimate, economic concerns precipitated its decision to relocate. In ascertaining the relocation's cause, the NLRB has promulgated a standard based upon the Supreme Court's opinion in Mt. Healthy City Sch. District Board of Ed. v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977):

First, we shall require that the General Counsel make a prima facie showing sufficient to support the inference that protected conduct was a "motivating factor" in the employer's decision. Once this is established, the burden will shift to the employer to demonstrate that the same action would have taken place even in the absence of the protected conduct.

Wright Line, 251 NLRB 1083, 1089 (1980), enf'd 662 F.2d 899 (1st Cir.1981).

The Supreme Court has approved the NLRB's burden shifting scheme. NLRB v. Transportation Management Corp., 462 U.S. 393, 398, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983).⁴ In the course of affirming Wright Line, the Court also stated that Section 7(c) of the Administrative Procedure Act ("APA") "determines only the burden of going forward, not the burden of persuasion." Id. at 403-04 n. 7, 103 S.Ct. 2469. In Director, Office of Workers' Compensation Programs v. Greenwich Collieries 512 U.S. 267, 114 S.Ct. 2251, 129 L.Ed.2d 221 (1994), the Court overruled this interpretation of Section 7(c). Section 7(c) does determine the "burden of persuasion," and thus requires that the burden perpetually remain with the action's proponent. Nevertheless, the Greenwich Court concluded that Wright Line was appropriate because it did no more than impose the burden of proving an affirmative defense on the employer. Greenwich, 512 U.S. at 278, 114 S.Ct. 2251. Greenwich, however, does suggest that the proponent must make a somewhat greater showing than just a prima facie one. See Southwest Merchandising Corp. v. NLRB, 53 F.3d 1334, 1340 n. 8 (D.C.Cir.1995).

Presently, the NLRB has adduced considerable evidence indicating that anti-union animus motivated Quadrtech's decision to relocate to Mexico. First, the timing of Quadrtech's decision is suggestive. In January, 2000 Quadrtech...