Father & Sons Lumber and Bldg. Supplies, Inc. v. N.L.R.B., s. 90-5036

• Decision Date: 01 April 1991
• Docket Number: Nos. 90-5036,90-5286,s. 90-5036
• Parties: 137 L.R.R.M. (BNA) 2561, 118 Lab.Cas. P 10,697 FATHER & SONS LUMBER AND BUILDING SUPPLIES, INC.; Father & Sons Lumber and Hardware Center; Michael T. Wudyka; and Edwin T. Wudyka, Petitioners-Cross-Respondents, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1093

931 F.2d 1093

137 L.R.R.M. (BNA) 2561, 118 Lab.Cas. P 10,697

FATHER & SONS LUMBER AND BUILDING SUPPLIES, INC.; Father &amp Sons Lumber and Hardware Center; Michael T Wudyka; and Edwin T. Wudyka Petitioners-Cross-Respondents, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.

Nos. 90-5036, 90-5286.

United States Court of Appeals Sixth Circuit.

Argued Feb. 14, 1991.

Decided April 1, 1991.

James R. Andary (argued), Andary, Brennan & Andary, Detroit, Mich., Barry A. Steinway, Thav, Gross & Steinway, Birmingham, Mich., for petitioners-cross-respondents.

Aileen A. Armstrong, Deputy Associate Gen. Counsel, John Burgoyne, Karen Cordry (argued), John C. Truesdale, Executive Secretary, Joseph E. Moore, William Wachter, N.L.R.B., Office of the General Counsel, Washington, D.C., Bernard Gottfried, Regional Director, N.L.R.B. Region 7, Detroit, Mich., for respondent-cross-petitioner.

Before RYAN and NORRIS, Circuit Judges, and PECK, Senior Circuit Judge.

RYAN, Circuit Judge.

Employers petition for review of two supplemental NLRB orders entered by default due to the employers' repeated failures to file timely answers. The first supplemental order specified the amount of a backpay award, and the second supplemental order made two individual employers personally liable for the backpay award. The NLRB cross-applies for enforcement of the two supplemental orders. The issues are whether the Board's imposition of the default orders violated the employers' rights to fairness and due process, and whether we should allow the employers to present the merits of their case to the NLRB because the employers have discovered new evidence.

We conclude that the Board's actions did not violate due process or tenets of fairness and that any "new" evidence is irrelevant to the propriety of the default judgments.

I.

In 1986, the General Counsel of the NLRB issued a complaint against Father and Sons Lumber and Building Supplies, Inc. (BSI). The complaint alleged that BSI committed various acts of unlawful discrimination against employees because the employees had cooperated with government investigators. BSI responded by stating that it was going out of business, but otherwise BSI filed no answer.

Accordingly, the General Counsel filed a motion for summary judgment, and the Board filed a Notice to Show Cause why the Board should not grant the General Counsel's motion. When BSI failed to respond, the Board granted the motion and ordered BSI to pay backpay to its former employees. We enforced the Board's order.

Next, the General Counsel specified the amount of backpay that BSI allegedly owed and informed BSI that it must respond by filing an answer within 21 days, as provided in 29 C.F.R. Sec. 102.56. After the 21-day period expired without a response, the General Counsel wrote to BSI to extend the period for filing an answer. Receiving no response by the extended deadline, the General Counsel mailed BSI a second letter indicating that if BSI did not file a response within a week, the General Counsel would file a motion for default summary judgment. BSI still failed to respond, so the General Counsel filed the threatened motion. By that point, BSI had retained new counsel, who noticed his appearance on December 20, 1988. On December 29, 1988, the Board issued a Notice to Show Cause why it should not grant the General Counsel's pending motion. On March 13, 1989, the Board, receiving no response to the Notice to Show Cause, granted the General Counsel's motion for default summary judgment.

A.

Not surprisingly, the defunct BSI failed to pay the backpay award. Therefore, the Regional Director filed an amendment to the backpay specification and alleged that as a result of their affiliations with BSI, Michael Wudyka and Edwin Wudyka, as well as Father and Sons Lumber and Hardware Center, were jointly and severally liable with BSI for payment of the backpay award. This amendment, forwarded by certified mail to all the employers and their new attorney, stated that pursuant to Board rules, the employers had 21 days within which to respond. After that period expired without a response, the General Counsel notified the employers by letter that unless they responded within the following two weeks, the General Counsel would file a motion for default judgment.

The letter noted, "Any answer to the [amended] Backpay Spec. filed now would be untimely and should be accompanied by a statement indicating the reason for its late submission." Within the two-week period, new counsel, citing his "pressing trial schedule," requested an additional two-week extension of the time for filing. The Regional Director decided that new counsel had shown "good cause," and granted the employers a time extension which was one day longer than new counsel had requested. However, defendants filed no answer by the end of the extended period, and this inaction prompted the General Counsel to file a motion for default judgment.

Four days after the extended deadline, defendant's counsel mailed a terse answer received approximately seven days after the deadline. The answer offered no reasons explaining why the employers' counsel waited until four days after the extended deadline to respond. The Board issued a Notice to Show Cause why it should not grant the motion for default judgment. The Board apparently then received a "one page letter" from counsel indicating that he had filed responses.

At any rate, counsel did submit a timely formal answer to the notice to show cause. This formal answer stated in very general terms that the answer to the amended specification had been timely filed but possibly due to clerical reasons, was not received until October 20, 1989. However, that statement avails not, because counsel dated and apparently mailed the answer to the amended specification on October 20, 1989. The employers' answer to the notice to show cause also stated that "justice requires that there be a fair and equitable hearing ... not a determination made on the basis of technical determinations of default ... this matter should be heard on its merits not on the supposition of counsel representing the National Labor Relations Board."

A few days later, counsel wrote the Regional Director. Counsel's letter stated, "I take full responsibility for the matter not being filed in a timely fashion ... I was involved in litigation at the time and unfortunately there was a breakdown of staff communication and staff responsibility." Counsel also referred to the interests of justice and stated that he would comply with all future deadlines by taking "personal charge of the relationship with the client." Simultaneously, counsel mailed a letter to the Board's Deputy Executive Secretary. New counsel echoed the statements made in the letter to the Regional Director, argued some of the case's merits, and indicated that M. Wudyka "was advised by an attorney that to defend this matter would only cause further costs and expenses and that the Board would probably dismiss it when they knew the Corporation had gone broke."

Unimpressed with new counsel's belated responses, the Board granted the motion for summary judgment, with the result that all employers became jointly and severally liable for the backpay award. The Board explained, "The [employers] do not provide any specific details concerning the breakdown of staff communication and responsibility, or state any circumstances that would warrant finding good cause for the [employers'] late filing."

B.

The employers appeal from both supplemental rulings. Since both corporate entities appear to be defunct, the individual employers are the actual parties to this appeal. While they formally appeal from both supplemental orders, employers' arguments bear exclusively upon the second supplemental order.

II.

We apply the "abuse of discretion" standard of review to claims that the Board erred in finding no "good cause" for accepting an untimely answer to a Board-issued specification. Cf. Livingston Powdered Metal, Inc. v. NLRB, 669 F.2d 133, 137 (3d Cir.1982); NLRB v. Zeno Table Co., Inc., 610 F.2d 567, 568-69 (9th Cir.1979). As the Seventh Circuit has stated "The Board's determination of what constitutes 'good cause' excusing a failure to file a timely answer must be upheld by the Court of Appeals unless its construction of the good cause standard is so arbitrary as to defeat justice." NLRB v. Dane County Dairy, 795 F.2d 1313, 1320 (7th...