Atlantic Limousine Inc. v. NLRB

• Decision Date: 16 March 2001
• Docket Number: Nos. 99-5609 and 99-5725,s. 99-5609 and 99-5725
• Citation: 243 F.3d 711
• Parties: (3rd Cir. 2001) ATLANTIC LIMOUSINE, INC., PETITIONER NO. 99-5609 v. NATIONAL LABOR RELATIONS BOARD, RESPONDENT NATIONAL LABOR RELATIONS BOARD, PETITIONER NO. 99-5725 v. ATLANTIC LIMOUSINE, INC., RESPONDENT
• Court: U.S. Court of Appeals — Third Circuit

Page 711

243 F.3d 711 (3rd Cir. 2001)

ATLANTIC LIMOUSINE, INC., PETITIONER NO. 99-5609 v. NATIONAL LABOR RELATIONS BOARD, RESPONDENT NATIONAL LABOR RELATIONS BOARD, PETITIONER NO. 99-5725 v. ATLANTIC LIMOUSINE, INC., RESPONDENT

Nos. 99-5609 and 99-5725

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued December 1, 2000

Filed March 16, 2001

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

Counsel for Atlantic Limousine: Angelo J. Genova, Esq. [argued] Brian O. Lipman, Esq. Genova, Burns & Vernoia 354 Eisenhower Parkway Plaza II, Suite 2575 Livingston, NJ 07039

Counsel for NLRB: Jeffrey Horowitz, Esq. [argued] Aileen A. Armstrong, Esq. Frederick C. Havard, Esq. Margaret A. Gaines, Esq. Fred B. Jacob, Esq. National Labor Relations Board 1099 14th Street N.W. Washington, DC 20570-0001

Before: Becker, Chief Judge, Rendell, and MAGILL,^* Circuit Judges

OPINION OF THE COURT

Rendell, Circuit Judge.

Atlantic Limousine, a limousine service providing services primarily to hotels and casinos in Atlantic City, New Jersey, has petitioned this court for review of the Order of the National Labor Relations Board awarding backpay in the amount of $22,507.74 plus interest to Victor Jenkins, and $17,296.73 plus interest to Henry Purcell, both of whom were limousine drivers for Atlantic. The Board has cross-applied for enforcement of the same order.

Specifically, Atlantic challenges the amount of tips the Board determined the two had earned, arguing that: (1) federal tax policy requires that the amount of tips Purcell and Jenkins declared on their income tax returns for those periods be dispositive on the issue of their past income; and (2) there was a lack of substantial evidence in support of the Board's backpay award. In addition, Atlantic contends that Jenkins failed to mitigate his damages because he was unavailable for work during the seven months between his termination and his reinstatement. Because we find both that the Board's reliance on the evidence adduced was proper, and that there was substantial evidence to support the Board's findings regarding both backpay and mitigation, we will deny the petition for review and enforce the order of the Board.

I. Procedural History

On March 4, 1995, the Board found that Atlantic had engaged in unfair labor practices in violation of 29 U.S.C. 158(a)(3) and (4) of the National Labor Relations Act ("Act") by discharging four and suspending one of its employees for their union activities.¹ Once the Board finds that an employer has committed an unfair labor practice, it has broad discretion under the Act to order the wrongdoer "to take such affirmative action including reinstatement of employees with or without backpay, as will effectuate the policies of [the Act]." 29 U.S.C. S 160(c). The purpose of the backpay remedy is to "mak[e] the employees whole for losses suffered on account of an unfair labor practice," Nathanson v. NLRB, 344 U.S. 25, 27 (1953), by restoring "the situation, as nearly as possible, to that which would have [been] obtained but for the illegal discrimination." Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941).

On May 28, 1997, the Board filed a compliance specification outlining the amount of backpay that should be paid to the aggrieved employees under the Board's March 4, 1995 remedial order. Atlantic challenged the compliance specification, and a hearing was held before an Administrative Law Judge ("ALJ"). The ALJ upheld the backpay award, and the Board affirmed its decision. We now review the Board's order.

II. Background

The standard formula the Board employs in arriving at a compliance specification is based on the earnings of the claimant in a representative period prior to the backpay period. The Board then applies the averages of those earnings to the backpay period. Atlantic does not challenge the formula used. Rather, it contends that the average weekly tip earnings used in the formula were incorrect because they exceeded the amounts reported on the employees' tax returns and were unsupported by the evidence.

Atlantic's drivers can be tipped in a variety of ways. Certain corporate and business clients have a contractual relationship with Atlantic, and are billed for services with charges that include a preset gratuity for the driver, which is distributed in the next paycheck. These tips are referred to as "tips on the bill." The drivers can also receive tips in cash or they can be added to a payment by credit card. Because tips on the bill and credit card tips are reflected in amounts transmitted directly to Atlantic, the only tip amounts disputed on appeal are the claimants' cash tips, since the drivers receive them directly from customers without receipts showing the amount given.

Atlantic requires its drivers to submit weekly time sheets indicating the number of hours they worked and the specific runs they made. These sheets also have a space at the bottom for the drivers to record the amount of cash tips they received, though the General Manager for Atlantic, Leon Geiger, testified that most drivers do not provide any information regarding their cash tips on their time sheets. Atlantic processes the timesheets and generates weekly tip declarations reflecting credit card tips, tips on the bill, and the cash tips reported on the time sheets. These tip declaration reports are then distributed to the drivers for their review and signature. The employees are instructed not to sign a tip declaration report if the tip amount indicated is incorrect.

Jenkins and Purcell claimed that they earned more in tips than reported in payroll and tax documents. Jenkins testified that he earned approximately $450 per week in tips, while Purcell claimed to have earned anywhere from $300 to $480 per week. Both admitted they had not accurately reported these earnings to the Internal Revenue Service ("IRS"). Jenkins had reported annual tip income to the IRS that reflected an average of $158 per week during this time, and Purcell, $115. Jenkins also testified that he would submit only the carbon copy of the time sheet to Atlantic, omitting his cash tips, but that he would record his cash tips on the original copy in a column listed as "Added Tips." He submitted the original copy of the time sheet for the last week he had worked for Atlantic in order to demonstrate this practice. This original copy reflected cash tip earnings of $430 for that week. That document was the only one submitted by Jenkins in support of his claim of higher tip levels. Purcell did not provide any documentation.

Jenkins also testified regarding his search for interim employment. He indicated that he searched for employment during the seven months he was unemployed by applying to two limousine companies approximately two weeks after he was terminated, answering newspaper ads for jobs at three casinos, and sending out many resumes. During those seven months, he was caring for his mother, who was ill. He stated that because his mother was sick and he was her caretaker, he was only available for work in the evening hours, though he explained that his time restriction did not prevent him from being able to work full-time. He also emphasized that he searched for employment during the entire period in question. He posited that the reason he could not find another limousine job right away was because he was "blackballed."

Seeking to counter the testimony of Jenkins and Purcell, Atlantic provided payroll records for 1992 and 1993 reflecting credit card tips, tips on the bill, and any cash tips declared by employees to Atlantic. Atlantic urged that these records, along with the tax returns filed by Jenkins and Purcell, should form the basis for determining its backpay liability.

On February 26, 1998, the ALJ issued its Supplemental Decision awarding Jenkins and Purcell $360 and $325 per week in backpay, respectively, which were the amounts set forth in the Board's compliance specification. First, the ALJ ruled that claimants may assert tip income that had not been reported in their tax returns. While the ALJ recognized that both claimants had failed to report all of their tip earnings to the IRS, he found that an admission of underreporting tips to the IRS does not preclude such tips from being included in a backpay award. The ALJ also determined that "both the employees and the Respondent had offsetting interest [sic] in under reporting actual income." ALJ Dec. at 4.

The ALJ stated its conclusion: "While the evidence is less than overwhelming, under these circumstances, I am not persuaded that the compliance figures for weekly tips of $360 for Jenkins and $325 for Purcell are unreasonable or inaccurate." Id. The ALJ further noted that "[t]he reported tips, relied upon by [Atlantic] clearly are not an accurate reflection of the actual tip income received." Id. The ALJ also found the testimony of Jenkins and Purcell to be "believable." Id. Finally, the ALJ concluded that there was "a sound and reasonable basis for [awarding] the figures set forth in the compliance specification," and that Atlantic had not offered convincing evidence that Jenkins and Purcell had earned less. Id.

The ALJ next turned to the issue of the mitigation of damages, finding that Jenkins testified credibly that he began to search for work immediately after his termination. The ALJ found that despite the fact that Jenkins had no interim earnings, this lack of success did not indicate a "willful failure or an unreasonable search for employment." Id. In addition, the ALJ rejected Atlantic's contention that Jenkins was unavailable for work due to his need to care for his mother.

On April 30, 1999, the Board issued its Supplemental Decision and Order affirming the ALJ's conclusion that "the gross backpay computations in the backpay specifications are the most accurate possible estimates of backpay and that [Atlantic] has failed to establish...