Coronet Foods, Inc. v. N.L.R.B.

• Decision Date: 22 October 1998
• Docket Number: Nos. 97-1087,97-1247,s. 97-1087
• Citation: 158 F.3d 782
• Parties: 159 L.R.R.M. (BNA) 2605 CORONET FOODS, INCORPORATED, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CORONET FOODS, INCORPORATED, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 782

158 F.3d 782

159 L.R.R.M. (BNA) 2605

CORONET FOODS, INCORPORATED, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. CORONET FOODS, INCORPORATED, Respondent.

Nos. 97-1087, 97-1247.

United States Court of Appeals Fourth Circuit.

Argued Oct. 29, 1997.

Decided Oct. 22, 1998.

ARGUED: Arthur B. Muchin, Laner, Muchin, Dombrow, Becker, Levin & Tominberg, Ltd., Chicago, Illinois, for Petitioner. Fred Barry Jacob, National Labor Relations Board, Washington, D.C., for Respondent. ON BRIEF: Neil P. Stern, Robert T. Bernstein, Laner, Muchin, Dombrow, Becker, Levin & Tominberg, Ltd., Chicago, Illinois, for Petitioner. Frederick L. Feinstein, General Counsel, Linda Sher, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, Peter Winkler, Supervisory Attorney, Meredith L. Jason, National Labor Relations Board, Washington, D.C., for Respondent.

Before WILKINS and MOTZ, Circuit Judges, and CAMPBELL, Senior Circuit Judge of the United States Court of Appeals for the First Circuit, sitting by designation.

Enforcement granted in part and denied in part by published opinion. Senior Judge CAMPBELL wrote the opinion, in which Judge WILKINS and Judge DIANA GRIBBON MOTZ joined.

OPINION

LEVIN H. CAMPBELL, Senior Circuit Judge:

This appeal arises from a petition by Coronet Foods, Inc. ("Coronet") to review, and the cross-application of the National Labor Relations Board ("NLRB" or the "Board") to enforce, the NLRB's Second Supplemental Decision and Order issued against Coronet. The NLRB had earlier found, in proceedings enforced by the D.C. Circuit, that Coronet's replacement of its in-house transportation department with an outside contractor was in retaliation for its employees' union activities and constituted unfair labor practices. The NLRB then held a compliance proceeding resulting in orders that Coronet restore the abolished transportation department and pay backpay in specific amounts to illegally terminated employees. In this review petition Coronet contends that restoration will place an undue burden on Coronet, and that the backpay awards should be set aside as excessive and improperly computed.

I.

Coronet is a West Virginia corporation with its principal place of business there. Its business consists of procuring, processing and cutting fresh vegetable produce like onions, peppers, cucumbers, radishes and lettuce to its customers' specifications. Its customers include fast food chains like McDonald's and Domino's. Part of Coronet's services include trucking the finished product to its customers' distribution centers over long distances, providing deliveries on a 24-hour seven-days-a-week basis. Because the products are perishable, fast and on-time deliveries are essential. Prior to 1989, Coronet owned and operated its own trucks and trailers, using its own drivers and mechanics, within a so-called transportation department. Its vehicles then included 11 tractors, 13 trailers and 6 or 7 "straight" trucks.

In 1987, employees in Coronet's in-house transportation department sought to join the local chapter of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, AFL-CIO (the "Union"). Coronet's management responded, as later found by the NLRB, infra, by threatening to close the department if it unionized. Transportation department employees nonetheless voted, in April 1988, to join the Union. Soon afterwards, Coronet laid off six of the department's employees and discharged one more who had participated in union activities. In May 1989, Coronet shut down its transportation department, laid off the mechanics and drivers within the department, and contracted with Ryder, an outside trucking company, to fulfill its transportation and delivery requirements.

Coronet's closure of the department and related actions were challenged before the NLRB as being in retaliation for its employees' union affiliation. Coronet responded, in defense, that its in-house trucking operation was inefficient and outmoded, and that its vice-president, Thomas Padden, who was hired in 1986, had made a business judgment to replace it with an outside operator. According to Coronet, unionization concerns were not the primary reason it had eliminated the department.

On March 22, 1990, an Administrative Law Judge ("ALJ") found that Coronet had violated § 8(a)(1) of the National Labor Relations Act ("NLRA") ¹ by threatening to close the transportation department if the employees unionized and by giving the impression that management was conducting surveillance of the employees' efforts to unionize. See Coronet Foods, Inc., 305 N.L.R.B. 79, 1991 WL 203802, at * 6-* 10 (1991) (ALJ decision). The ALJ also concluded that Coronet had violated NLRA §§ 8(a)(3) ² and (1) by closing its transportation department and by laying off and discharging employees who supported the Union. See id. at * 11-* 19. Coronet's failure to negotiate with the Union regarding the department closing was held to violate NLRA §§ 8(a)(5) ³ and (1). See id. at * 19-* 21.

Although the ALJ found credible Padden's testimony that he wished Coronet to get out of the trucking business as early as 1986 for legitimate business reasons, the ALJ determined that it was only in 1989, after unionization became an issue, that Coronet decided to close the in-house operation. The ALJ also found that the company's owner and founder, Edward Long, not Padden, had the authority to make the closure decision; that Long authorized the purchase of new trucks in 1987; and that it was only when the union appeared that closure was ordered.

For relief, the ALJ recommended that Coronet be ordered to restore the transportation department and reinstate with backpay the employees it had laid off and discharged. See id. at * 21-* 22. The ALJ found no evidence in the record that "resumption of[Coronet's] transportation operations would cause it undue hardship." Id. at * 26. The ALJ's recommendations were adopted in September 1991, with only minor alterations by the NLRB's three-member panel. See id. at * 1-* 2 (panel decision). The panel's order was reviewed and enforced by the United States Court of Appeals for the District of Columbia. See Coronet Foods, Inc. v. NLRB, 981 F.2d 1284 (D.C.Cir.1993). In its opinion, the Court of Appeals stated that Coronet "utterly failed to carry" its burden of production and persuasion on its defense that restoration of the transportation department would cause an undue burden on the company. Id. at 1288. ⁴

The NLRB's General Counsel then instituted the compliance proceedings now before us. These were undertaken to consider further Coronet's objections to the NLRB's restoration order and to determine the amount of backpay due. On February 10, 1994, the NLRB's Regional Director for Region Six issued a compliance specification that set out the amount of backpay owed by Coronet to each terminated employee. In its answer, Coronet contested the various remedies. First, it asserted that the NLRB failed to toll backpay as of the date that Coronet would have laid off the employees for nondiscriminatory reasons. Second, it alleged that the NLRB was using the incorrect backpay formula. Third, it contended that restoration of its transportation department would impose an undue burden upon Coronet.

An ALJ held an eight-day hearing and, on April 19, 1996, issued a supplemental decision in which he found for the NLRB, with only minor exceptions. See Coronet Foods, Inc., 322 N.L.R.B. 837, 1997 WL 11274, at * 4 (1997) (ALJ's supplemental decision). While the Board had ordered restoration in the original unfair labor practice proceeding and the D.C. Circuit had rejected the undue burden defense, supra, both the D.C. Circuit and the Board acknowledged that the restoration order could be further litigated in the compliance proceeding, and this occurred, resulting in the ALJ's reaffirmation that Coronet must restore its in-house transportation department. See id. at * 4-* 5. The ALJ found insufficient support for Coronet's claim that resuscitating the department would cause undue hardship. See id. The ALJ also found that the General Counsel had used the correct backpay formula. See id. at * 7-* 8. The ALJ tolled a few backpay awards for times during which particular employees had been unavailable for work, had failed to engage in a reasonably diligent search for work, or had been employed part-time, but rejected most of Coronet's objections to individual claimant's backpay figures. See id. at * 8-* 16. The NLRB's three-member panel subsequently issued its Second Supplemental Decision and Order, in which it adopted the ALJ's conclusions and recommended order, with minor exceptions. ⁵ See id. at * 1-* 2. Coronet seeks review of, and the NLRB seeks to enforce, the NLRB's Second Supplemental Decision and Order dated January 10, 1997.

II.

Coronet concedes, as it must, the finality of the Board's 1991 unfair labor practice decision, enforced in 1993 by the D.C. Circuit. That decision held that Coronet's closure of its transportation department in 1989, and its discharge of drivers and mechanics in that department, were illegal. Restoration of the department and backpay were also ordered at that time. However, the D.C. Circuit and Board acknowledged that these remedy issues would remain for reconsideration in the subsequent compliance proceedings now under review. We accordingly focus in this opinion solely on remedy.

We turn first to the propriety of the Board's order that Coronet restore its in-house transportation department rather than continue to contract for trucking services as it has been doing since 1989. Coronet initially contracted with a national provider of trucking services, Ryder, in May of 1989. A year later it became briefly involved with a trucking contractor known as TCC. Coronet canceled that arrangement in favor of LMI, the contractor it has...