Golden State Bottling Company, Inc v. National Labor Relations Board 8212 702

• Decision Date: 05 December 1973
• Docket Number: No. 72,72
• Citation: 414 U.S. 168,94 S.Ct. 414,38 L.Ed.2d 388
• Parties: GOLDEN STATE BOTTLING COMPANY, INC., et al., Petitioners, v. NATIONAL LABOR RELATIONS BOARD. —702
• Court: U.S. Supreme Court

414 U.S. 168

94 S.Ct. 414

38 L.Ed.2d 388

GOLDEN STATE BOTTLING COMPANY, INC., et al., Petitioners,

v NATIONAL LABOR RELATIONS BOARD.

No. 72—702.

Argued Oct. 11, 1973.

Decided Dec. 5, 1973.

Syllabus

Petitioner All American Beverages, Inc. (All American), purchased the soft drink bottling and distribution business of petitioner Golden State Bottling Co. (Golden State) after the National Labor Relations Board (NLRB) had ordered Golden State, 'its officers, agents, successors, and assigns' to reinstate with backpay a driver-salesman whose discharge by Golden State was found to have been an unfair labor practice. In a subsequent back-pay specification proceeding to which both firms were parties, upon finding that All American after the acquisition continued the business without interruption or substantial change in operations, employee complement, or supervisory personnel, and that hence All American, having acquired the business with knowledge of the outstanding NLRB order, was a 'successor' for purposes of the National Labor Relations Act (NLRA), liable for the reinstatement of the driver-salesman with backpay, the NLRB ordered All American to reinstate him and both firms jointly or severally to pay him a specified sum of backpay. The Court of Appeals enforced the order. Held:

1. The Court of Appeals did not err in determining that, on the record as a whole, substantial evidence supported the NLRB's finding that All American purchased the business with knowledge of the unfair labor practice litigation, since it cannot be said on the basis of the record that the Court of Appeals 'misapprehended or grossly misapplied' the standard of review. Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456. Pp. 172—174.

2. The issuance of a reinstatement and backpay order against a bona fide successor that did not itself commit the unfair labor practice does not exceed the NLRB's remedial powers under § 10(c) of the NLRA, since such powers include broad discretion to fashion and issue such an order in order to achieve the ends and effectuate the policies of the Act. Pp. 175—177 3. Federal Rule Civ.Proc. 65(d), which provides that injunctions and restraining orders shall be binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order, does not bar judicial enforcement of the NLRB order running to All American, since a bona fide successor, acquiring, with knowledge that the wrong remains unremedied, the employing enterprise which was the locus of the unfair labor practice, may be considered in privity with its predecessor for purposes of Rule 65(d). Pp. 177 181.

4. The NLRB properly exercised its discretion in issuing the order against All American by striking an equitable balance among the conflicting legitimate interests of the bona fide successor, the public, and the affected employee for purposes of effectuating the national labor policies of avoiding labor strife, preventing a deterrent effect on the exercise of rights guaranteed employees by § 7 of the NLRA, and protecting the victimized employee, such policies being achieved at a relatively minimal cost to the bona fide successor. Pp. 181—185.

5. The NLRB did not err in ordering both firms jointly or severally to pay the driver-salesman a specified sum of backpay, since an offending predecessor-employer should at least be required to make the dischargee whole for any loss of pay suffered by reason of the discharge until such time as he secures substantially equivalent employment, since joint and several liability will more fully insure that the employee is fully recompensed by protecting him against, e.g., the successor's insolvency, and since the possibility that the successor will unjustifiably delay reinstatement to the predecessor's prejudice can be met by a protective provision in the contract of sale. Pp. 186—187.

6. The fact that the driver-salesman, but for his discharge as an ordinary employee would, under Golden State's policy, have become a distributor about a year later and as an independent contractor would have been excluded from NLRA coverage, did not preclude the NLRB from including in the gross backpay computation the dischargee's putative earnings as a distributor, since a reinstatement and backpay order is aimed at restoring the status quo that would have obtained but for the employer's unfair labor practice. Pp. 187—189.

9 Cir., 467 F.2d 164, affirmed.

Morton B. Jackson, Los Angeles, Cal., for petitioners.

Norton J. Come, Washington, D.C., for respondent.

Mr. Justice BRENNAN delivered the opinion of the Court.

The principal question for decision in this case is whether the bona fide purchaser of a business, who acquires and continues the business with knowledge that his predecessor has committed an unfair labor practice in the discharge of an employee, may be ordered by the National Labor Relations Board to reinstate the employee with backpay.

Petitioners are Golden State Bottling Co., Inc. (Golden State), and All American Beverages, Inc. (All American). All American bought Golden State's soft drink bottling and distribution business after the National Labor Relations Board had ordered Golden State, 'its officers, agents, successors, and assigns' to reinstate with backpay a driver-salesman, Kenneth L. Baker, whose discharge by Golden State was found by the Board to have been an unfair labor practice.¹ In a subsequent back- pay specification proceeding to which both Golden State and All American were parties, see 29 CFR §§ 102.52—102.59, the Board found that All American continued after the acquisition to carry on the business without interruption or substantial changes in method of operation, employee complement, or supervisory personnel. In that circumstance, although All American was a bona fide purchaser of the business, unconnected with Golden State, the Board found that All American, having acquired the business with knowledge of the outstanding Board order, was a 'successor' for purposes of the National Labor Relations Act and liable for the reinstatement of Baker with backpay under the principles announced in Perma Vinyl Corp., 164 N.L.R.B. 968 (1967), enforced sub nom. United States Pipe & Foundary Co. v. NLRB, 398 F.2d 544 (CA5 1968).² The Board therefore ordered that All American reinstate Baker and that Golden State and All American jointly or severally pay Baker a specified sum of net backpay. 187 N.L.R.B. 1017 (1971). The Court of Appeals for the Ninth Circuit, one judge dissenting, enforced the order, 467 F.2d 164 (1972). We granted certiorari, 410 U.S. 953, 93 S.Ct. 1417, 35 L.Ed.2d 685 (1973). We affirm.

I

There is a threshold question of whether the Court of Appeals erred in determining that the evidence 'offered substantial support for the Board's finding that All American purchased (the bottling business) with knowledge of the unfair labor practice litigation.' 467 F.2d, at 165. We address that question mindful of the congressionally imposed limitation on this Court's review of the Court of Appeals' determination:

'Whether on the record as a whole there is substantial evidence to support agency findings is a question which Congress has placed in the keeping of the Courts of Appeals. This Court will intervene only in what ought to be the rare instance when the standard appears to have been misapprehended or grossly misapplied.' Universal Camera Corp. v NLRB, 340 U.S. 474, 491, 71 S.Ct. 456, 466, 95 L.Ed. 456 (1951). (Emphasis added.)

Thus limited, we cannot find fault with the Court of Appeals' conclusion that, on the record as a whole, substantial evidence supported the Board's finding that All American purchased the business with knowledge of the unfair labor practice litigation. Eugene Schilling, Golden State's secretary and manager of the bottling business, who had discharged Baker and then closely followed the progress of the litigation, continued with the enterprise under All American's ownership with the title of general manager and 'president'. Indeed, All American's purchase of the business was conditioned on Schilling's staying on in a managerial capacity; the sales contract expressly stipulated that Schilling 'shall have agreed to be employed by (All American) for a period of one year after the Closing Date as General Manager . . ..' Schilling participated on at least one occasion with Golden State's president, Edwin J. Crofoot, in the sale negotations. Even if strict agency principles would not impute Schilling's knowledge to All American until Schilling actually entered its employ, see Restatement (Second) of Agency § 9(3) (1958); Thomas Engine Corp., 179 N.L.R.B. 1029, 1042 (1970), enforced sub nom. NAW v. NLRB, 442 F.2d 1180 (CA9 1971), the Court of Appeals cannot be said to have 'misapprehended or grossly misapplied' the governing standard in appraising this evidence as sufficiently substantial to support an inference that Schilling informed his prospective employer of the litigation before completion of the sale. It is true that both Schilling and Crofoot testified at the hearing in the specification proceeding that they had not informed All American of the litigation before the sale was completed. But the trial examiner refused to credit their testimony in light of documentary evidence from which he inferred that the Golden State officials had attempted to conceal the sale from the Board, 187 N.L.R.B., at 1021. The examiner also refused to credit Crofoot's testimony that, while All American expressly asked him whether any litigation was pending, he did not mention the unfair labor practice case because he had forgotten it, although admitting that he had authorized payment of substantial fees in connection with it. Ibid. Finally, the examiner inferred from the unexplained failure of All American to produce its...