KFC National Management Corp. v. NLRB, No. 821

CourtU.S. Court of Appeals — Second Circuit
Writing for the CourtKAUFMAN, , and SMITH and ANDERSON, Circuit
Citation497 F.2d 298
PartiesKFC NATIONAL MANAGEMENT CORP., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
Decision Date08 May 1974
Docket NumberDocket 73-1982.,No. 821

497 F.2d 298 (1974)

KFC NATIONAL MANAGEMENT CORP., Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 821, Docket 73-1982.

United States Court of Appeals, Second Circuit.

Argued March 29, 1974.

Decided May 8, 1974.


497 F.2d 299

Jay S. Siegel, Hartford, Conn. (Siegel & O'Connor, Hartford, Conn.), for petitioner.

Alan David Cirker, Atty., NLRB (Peter G. Nash, Gen. Counsel, John S. Irving, Deputy Gen. Counsel, Patrick Hardin, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Michael S. Wolly, Atty., NLRB, Washington, D. C., of counsel), for respondent.

Before KAUFMAN, Chief Judge, and SMITH and ANDERSON, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge:

KFC National Management Corp., ordered by the National Labor Relations Board (204 N.L.R.B. No. 69) to bargain with a union certified as representative of its employees petitions for review of the order and the Board cross-petitions for enforcement. Review granted. Cross-petition for enforcement denied.

This petition for review of an unfair labor practice decision raises the troublesome question of delegation of authority in administrative decision making. The genesis of the petition, was a representation election contested by the employer, KFC, on grounds of pro-union activity of supervisory employees. The NLRB Regional Director, to whom KFC protested, conducted an ex parte investigation into the company's claims and concluded that they had "no merit" and that therefore the union should be certified as the duly-elected bargaining representative.

497 F.2d 300

Dissatisfied with both the Director's findings and his failure to conduct an adversary hearing, KFC petitioned the Board for review. On September 7, 1972—approximately two weeks after the petition was filed—KFC's counsel received a brief telegram informing him that the request had been denied "as it raises no substantial issues warranting review." The telegram was signed, "By direction of the Board." A further petition for reconsideration was similarly telegraphically denied, "as lacking in merit"—again "By direction of the Board."

When KFC continued to refuse to bargain, this unfair practice charge was filed. In its answer to the complaint, KFC again pressed its objections to the election and asked for a full hearing on its claims. In addition, the company for the first time challenged the denials of review and reconsideration on the grounds that the "Board" had in fact been composed of but one Board member and two staff assistants.1

In its decision on the unfair practice charge, the Board—now concededly composed of three official members— refused to reconsider the Director's decision relying on its "no relitigation" rule, and categorically rejected KFC's procedural objection as an unjustified intrusion into its decision-making process.2

497 F.2d 301

As part of this petition for review of the Board's unfair practice order, KFC made a motion for a supplemental list of materials including,

All documents, papers and records, including agenda memos, case summaries, etc. of the National Labor Relations Board and particularly members Miller, Fanning, and Jenkins, their agents, employees, attorneys and assistants, and in particular any such documents, papers and records in the Review Section of the Board under the supervision of Gilbert Rosenberg, relating to consideration of the Employer\'s Request for Review.
. . . . . .

On October 17, 1973, this court denied the motion, except "to the limited extent" of requiring "that the Board shall serve and file a detailed statement showing the extent and date of the participation of members Miller, Fanning and Jenkins in the consideration of the Employer's request and motion. . . ." The Board responded with an affidavit from its Executive Secretary stating:

Member Jenkins was personally present and Chairman Miller and Member Fanning were each represented by an attorney assistant employed on his respective staff who had been authorized to cast a vote for him at the said agenda. The vote at the agenda was unanimous to deny review.

From its own argument—both written and oral—we have further learned that the authorizations referred to were quite general in nature: In the normal course of events, Board members seldom discuss individual cases with their assistants prior to these voting sessions. There is, apparently, a one-day period between the votes and the filing of decisions, but there is no evidence that the members normally review the votes cast by their staff assistants. The Board has represented—and we have no reason to doubt—that particularly difficult or significant cases receive the individual attention of the members either before or after their votes are cast by their proxies. But there is no suggestion that such was the case here: Indeed it is the Board's position that this case—like the vast majority of review petitions3—was so routine that it was well suited to this general delegation approach.4

I.

The question then is whether this virtually complete delegation comports

497 F.2d 302
with the requirements of the National Labor Relations Act and of administrative due process in general

Inquiry into the statutory requirements of the National Labor Relations Act should begin with a bit of legislative history. Until the Landrum-Griffin Act of 1959, the Board was directly responsible for each and every representation decision. This tremendous burden—over 10,000 cases in 19595—prompted Congress to amend the Act to permit delegation of those decisions to the Board's Regional Directors—subject to discretionary review by the Board:

The Board is also authorized to delegate to its regional directors its powers under section 159 of this title to . . . certify the results of bargaining elections, except that upon the filing of a request therefor with the Board by any interested person, the Board may review any action of a regional director delegated to him under this paragraph. . . .

29 U.S.C. § 153(b).

In 1961 the Board exercised this authority by delegating representation matters subject to review by the Board on four different grounds:

(c) The Board will grant a request for review only where compelling reasons exist therefor. Accordingly, a request for review may be granted only upon one or more of the following grounds:
(1) That a substantial question of law or policy is raised because of (i) the absence of, or (ii) a departure from, officially reported Board precedent.
(2) That the regional director\'s decision on a substantial factual issue is clearly erroneous on the record and such error prejudicially affects the rights of a party.
(3) That the conduct of the hearing or any ruling made in connection with the proceeding has resulted in prejudicial error.
(4) That there are compelling reasons for reconsideration of an important Board rule or policy.

29 C.F.R. § 102.67(c).

Section 102.67 makes it clear that the decision on whether or not to grant such review is also to be made by the Board. See 29 C.F.R. § 102.67 (e, f). While there is a provision for automatic consideration of cases referred to the Board by the Regional Directors, 29 C.F.R. § 102.67(h), there is no converse language in either the statute or regulations suggesting that the Regional Director, or any other non-member, can preclude Board review.

Thus as the Board concedes, it, and it alone, had to rule on KFC's review petition. And as is further undisputed, such Board action could be taken by no fewer than two members acting as a quorum of a three-member panel. 29 U.S.C. § 153(b). Thus the real question is whether the two absent members here could legally authorize their staff assistants to vote in their place.

Here again legislative history is somewhat instructive. In 1947 a Congress concerned with excessive "institutional" decision making by the NLRB—and particularly the rather intimate relationship between the trial examiners initially deciding cases and the corps of staff attorneys advising the Board members on their review—amended the National Labor Relations Act to provide for more independent, personal adjudication.6

497 F.2d 303

The Board, undoubtedly aware that this portion of the Taft-Hartley Act expressed Congress' general distrust of review attorneys,7 nevertheless argues that in making each assistant responsible to but one Board member, Congress intended to foster even greater delegations from member to assistant. We cannot agree. Rather we believe that the authors of Taft-Hartley were only prepared to permit the staff assistants to aid the members who were themselves to be responsible for the Board's actions. Davis, Administrative Law Treatise § 11.13 (1958). For example, while the allocation of the Board's administrative, prosecutorial, and adjudicative functions is well discussed in the Taft-Hartley conference report, there is no suggestion that the Board members could or should delegate their "quasi-judicial" function to their staff assistants beyond that of reviewing transcripts or preparing draft opinions. 1947 U.S.Code Congressional Service pp. 1135, 1142-1143 (1947).

Here, of course, the staff assistants of two members did far more and, more importantly, they did so without guidance from the members themselves. They did not merely assist the members; they acted in their stead. In view of the rather clear congressional distrust of staff assistants—who are, of course, neither appointed by the President nor approved by the Senate, as are the Board members, 29 U.S.C. § 153(a)—we cannot say that Congress intended, or would have approved, the general proxies issued here. We hold, therefore, that the "Board's" votes in this case fail to satisfy the two-member quorum and three-member panel requirements of the Act. 29 U.S.C. § 153(b).

II.

The Board nevertheless argues that such delegation is supported by the law of administrative decision making, most notably United States v. Morgan, 313 U.S. 409, 61 S.Ct. 999, 85 L.Ed. 1429 (1941)....

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45 practice notes
  • Kent Corp. v. N.L.R.B., No. 74--1710
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 21, 1976
    ...Park, Inc. v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 825, 28 L.Ed.2d 136, 156 (1971); see also KFC National Management Corp. v. NLRB, 497 F.2d 298 (C.A.2, 1974); Singer Sewing Machine Co. v. NLRB, 329 F.2d 200 (C.A.4, 1964); S. D. Warren Co. v. NLRB, 342 F.2d 814, 816--17 (C.A.1, 1965), ce......
  • Board of Ed. of City School Dist. of City of New York v. Harris, No. 1079
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 19, 1980
    ...73 S.Ct. 67, 97 L.Ed. 54 (1952); NLRB v. Newton-New Haven Co., 506 F.2d 1035, 1038 (2d Cir. 1974); KFC National Management Corp. v. NLRB, 497 F.2d 298, 300 n.1 (2d Cir. 1974), cert. denied, 423 U.S. 1087, 96 S.Ct. 879, 47 L.Ed.2d 98 (1976). However, the theory that the implementation of the......
  • Gulf States Utilities Co. v. Louisiana Public Service Com'n, Nos. 88
    • United States
    • Supreme Court of Louisiana
    • April 5, 1991
    ...to confront witnesses and to hear and contest the evidence against him." Id. at 816. In KFC National Management Corp. v. N.L.R.B., 497 F.2d 298 (2d Cir.1974), the N.L.R.B. regional director had made an ex parte investigation into the plaintiff's allegation of an unfair labor practice, and h......
  • Overstreet v. El Paso Disposal, L.P., No. EP-09-CV-275-DB.
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • October 30, 2009
    ...Co., 570 F.3d 534, 540 (4th Cir.2009); Flav-O-Rich, Inc. v. NLRB, 531 F.2d 358, 363-64 (6th Cir.1976); KFC Nat'l Mgmt. Corp. v. NLRB, 497 F.2d 298, 303, 306-07 (2d Cir. 1974). Section 3(b) lists two instances in which the Board may delegate its authority: (1) delegation to a smaller group o......
  • Request a trial to view additional results
45 cases
  • Kent Corp. v. N.L.R.B., No. 74--1710
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 21, 1976
    ...Park, Inc. v. Volpe, 401 U.S. 402, 420, 91 S.Ct. 814, 825, 28 L.Ed.2d 136, 156 (1971); see also KFC National Management Corp. v. NLRB, 497 F.2d 298 (C.A.2, 1974); Singer Sewing Machine Co. v. NLRB, 329 F.2d 200 (C.A.4, 1964); S. D. Warren Co. v. NLRB, 342 F.2d 814, 816--17 (C.A.1, 1965), ce......
  • Board of Ed. of City School Dist. of City of New York v. Harris, No. 1079
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 19, 1980
    ...73 S.Ct. 67, 97 L.Ed. 54 (1952); NLRB v. Newton-New Haven Co., 506 F.2d 1035, 1038 (2d Cir. 1974); KFC National Management Corp. v. NLRB, 497 F.2d 298, 300 n.1 (2d Cir. 1974), cert. denied, 423 U.S. 1087, 96 S.Ct. 879, 47 L.Ed.2d 98 (1976). However, the theory that the implementation of the......
  • Gulf States Utilities Co. v. Louisiana Public Service Com'n, Nos. 88
    • United States
    • Supreme Court of Louisiana
    • April 5, 1991
    ...to confront witnesses and to hear and contest the evidence against him." Id. at 816. In KFC National Management Corp. v. N.L.R.B., 497 F.2d 298 (2d Cir.1974), the N.L.R.B. regional director had made an ex parte investigation into the plaintiff's allegation of an unfair labor practice, and h......
  • Overstreet v. El Paso Disposal, L.P., No. EP-09-CV-275-DB.
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • October 30, 2009
    ...Co., 570 F.3d 534, 540 (4th Cir.2009); Flav-O-Rich, Inc. v. NLRB, 531 F.2d 358, 363-64 (6th Cir.1976); KFC Nat'l Mgmt. Corp. v. NLRB, 497 F.2d 298, 303, 306-07 (2d Cir. 1974). Section 3(b) lists two instances in which the Board may delegate its authority: (1) delegation to a smaller group o......
  • Request a trial to view additional results

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